Pell Grants Threatened A Year After Landmark Legislation Raised Them
A year after President Barack Obama celebrated a landmark change to boost funding for Pell grants, he’s been forced to both defend his actions to support low-income students and scale back his ambitions because of a fight with a resurgent Republican Party in Congress about how much money the government should spend.
With college tuition rising faster than inflation and state governments essentially broke, more and more students have turned to the federal government to help pay the cost of a college. Republicans fearful of the government’s mounting deficits have targeted the Pell grants as a quick way to chop a half-percent in federal discretionary spending.
Shifting the source of federal student loans from commercial lenders to the U.S. Treasury was the central part of the Health Care and Education Reconciliation Act, which Obama signed into law on March 30, 2010. By taking banks largely out of the picture, the government will save $61 billion through 2020.
The legislation directed more than half of the savings to fund automatic increases for Pell grant awards during the next handful of years. But the budget bill approved last month by the Republican majority in the House of Representatives takes away the funding needed to eliminate banks from the student loan program. In turn, the legislation would cut Pell grant awards by 27 percent for the coming fall, reducing the maximum grant from $5,500 to $4,705. For the average recipient, that would be a loss of $745.
Two in five University of California students benefit from Pell Grants, which can cover about half of tuition costs. The grants are awarded to about nine million students nationwide based on a formula that determines their ability to pay for college.
The president's budget proposal for next year , unrelated to the spending resolution for this year, would prevent Pell Grants from covering summer school and would eliminate subsidies for graduate student loans. He's said the cutbacks are designed to keep the size of Pell Grants awards from being reduced. With the number of eligible students on the rise, the cost of the program is expected to jump from about $30 billion for the 2011-2012 school year to more than $40 billion for the next school year.
Both Obama’s proposal and the House-passed legislation would likely impede Obama’s efforts to increase the number of college graduates by 50 percent during the next decade.
Lawmakers will continue to debate during the next week a spending resolution for April 9 through Sept. 30. Republicans want to cut about $51 billion; Democrats concede only up to $20 billion.
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