Keeping Pell Grant, Other Aid Funding Steady is Vital
A Senate Appropriations subcommittee recently approved a fiscal 2012 education budget that would maintain the maximum Pell Grant award of $5,500. The move is an important step for sustaining student aid programs—so long as it doesn’t cause students to incur other costs.
The bill, passed 10-8 along party lines by the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education and Related Agencies, would keep the discretionary portion of the maximum Pell Grant award level at $4,860 and the mandatory funding at $640 for the 2012-2013 school year. It would likely also keep funding steady for federal work-study programs and direct $100 million to the Workforce Innovation Fund to boost job-training programs, according to Inside Higher Ed,
The Pell Grant program, considered the cornerstone of federal financial aid, assists an estimated 9.4 million low- and middle-income students in paying for their college education. Campus Progress previously reported that, as part of the deal to raise the federal debt ceiling, Congress would take steps to fill a nearly $20 billion shortfall in the Pell funding over the next two years.
Protecting the Pell Grant and maintaining the maximum award of $5,550 dollars is an absolute imperative for investing in Americans’ education and Campus Progress is pleased to see that some members of Congress and the Obama administration continue to prioritize Pell in the face of sweeping budget cuts and spending caps.
But we must be cautious of the steps taken to protect this vital program.
In the Budget Control Act—the debt ceiling deal—Congress voted to end the in-school subsidy for loans taken out by graduate students. This change allows interest to accrue on graduate students’ loans while they’re still in school. Previously, graduate students were not responsible for paying interest on subsidized student loans while still enrolled.
The move to end subsidies for graduate student loans was met with some resistance but generally garnered acceptance from the higher education community as a necessary step to protect low-income students beginning their post-secondary education—many of whom could not afford college without Pell grants.
The newest proposal to fully fund the Pell program goes a step further by allowing interest on unsubsidized Stafford loans for undergraduate to accrue immediately after graduation instead of when students enter repayment. Students would continue to have a six-month grace period before repaying, but would now be responsible for interest accrued during that time.
This change makes unsubsidized Stafford loans—the majority of which go to the same low-income students that the Pell Grant is intended to aid—more expensive for students while saving the government nearly $6 billion over the next decade.
Ending the subsidized interest grace period is the most recent attempt to shift funding to the Pell program, coming on the heels of other cuts, including terminating year-long Pell Grants.
What’s more, the Pell Grant does not cover the cost of attending the majority of post-secondary institutions today. In 1972, the Pell Grant covered 100 percent of the cost of an education at a public school. Now, it covers just 34 percent.
It’s no secret that Americans are borrowing student loans to help pay for their education. Data released recently by the Department of Education reveals that more graduates are defaulting on their loans than in the past decade, an increase of almost 2 percent in the last year. (At for-profit colleges, the default rates are already incredibly high—and rising faster.)
In this economy, students are finding their education loans increasingly unmanageable and any policy change that increases the cost of student seems misguided.
Congress and the Obama administration should be commended for working to preserve the integrity of the Pell Grant. But as the need for programs like Pell continue, we must think more critically about how to pay for these vital but expensive programs.
Cutting one area of financial aid for low-income students in order to pay for another program geared toward helping the same demographic is counterproductive. Instead, we should seek solutions that maintain programs like Pell while continuing to fund low-cost student loans and important college completion programs like TRIO.
Campus Progress continues to advocate for increased federal and state investment in student aid programs that support college completion and encourages the important discussion of ways to make necessary investments to ensure that America’s economic future is bright.
Angela is the policy and advocacy manager for Campus Progress. She graduated from Western Michigan University.
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