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TUESDAY BUZZ: President Signs Debt Ceiling Bill

August 02, 2011

Measure Preserves Pell Grants, Cuts Graduate, Professional Loan Subsidies

The Senate today voted 74-26 to approve the Budget Control Act of 2011 to increase the federal government’s borrowing authority, averting a potential debt default just hours ahead of the midnight deadline. President Obama signed the measure, which includes $17 billion over two years for the Pell Grant Program, almost immediately.

The House yesterday voted 269-161 to pass the bipartisan agreement.

The supplemental Pell Grant funding will enable the maximum award to remain at $5,550 for FY 2012. However, as the Student Aid Alliance pointed out in a statement, the deal comes at a real cost to some students. The compromise eliminates the in-school interest exemption for graduate and professional students and on-time repayment incentives for student borrowers, which is likely to result in college becoming more expensive for millions of students and families.

These cuts come on top of the recent elimination of year-round Pell Grants and the Leveraging Educational Assistance Partnership (LEAP) Program, as well as funding cuts to the TRIO Programs, GEAR UP, the Supplemental Educational Opportunity Grant (SEOG) Program and graduate education programs.

Despite the bipartisan support for Pell Grants, the program’s future remains uncertain. As Chronicle of Higher Education Editor Jeffrey Selingo said in an editorial Friday, debates on how to change Pell Grants are inevitable.

“Lots of ideas have been thrown about, including cutting the maximum award, limiting eligibility to fewer semesters, and giving small grants in the first year,” he wrote. “Those will be the debates in Washington over the coming years: discussion about how to limit access to higher education rather than ways to strengthen the economy through increasing access to some form of postsecondary education.”

For more on the debt ceiling deal and its effect on student aid, see the following:

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