There’s good news and bad news about education funding under the debt ceiling deal. Subsidized federal student loans for undergraduates have been spared, but most funding for graduate students in the form of an in-school subsidy on federal loans will be eliminated.
The proposal provides $17 billion for the Pell Grant program for low-income college students; the Senate had proposed $18 billion for the program, which is expected to have an $11 billion shortfall this year, says the Chronicle of Higher Education. However, the proposal eliminates the federal subsidized graduate student loan program, for an estimated savings of $26.3 billion from 2012 from 2021.
Here’s what the proposal says about eliminating the graduate student subsidy, which allowed those enrolled more than half-time in their studies to pay no interest on their student loans:
Beginning July 1, 2012, the bill would eliminate the interest subsidy on subsidized student loans for almost all graduate students while a borrower in school, in the post-school grace period, and during any authorized deferment period. (Certain post-baccalaureate students would still be eligible.) The current annual and cumulative loan limits for unsubsidized loans would be adjusted to permit students to borrow additional funds in the unsubsidized loan program. CBO [Congressional Budget Office] projects that, over the 2012-2021 period, the provision would shift approximately $125 billion in loan volume from the subsidized to the unsubsidized loan program. Because borrowers would be responsible for the interest accrued on those loans while in school, CBO estimates that this provision would reduce direct spending by $8.2 billion over the 2012-2016 period and $18.1 billion over the 2012 – 2021 period.
The New York Times Bucks blog also says that those with federal student loans would no longer receive incentive bonuses that some students now receive for making on-time payments.
As Think Progress notes, the lowest income graduate students “would still receive assistance for their loans thanks to newly-enacted Income Based Repayment (IBR), and this shift would not make graduate education any more expensive for those students.”
A few graduate students, undergraduates and parents have posted comments at the New York Times Bucks blog; these give a sense of the real impact of the cuts, and at a time when it’s become more important than ever to get a graduate degree:
This is infuriating. What are those of us that were axed during the Recession, and thought returning to school would give us the edge we needed to thrive again in the workplace, supposed to think about this? We’ve been thrown to the sharks. (toni, new york city)
Cuts to student loans here, a tuition increase there, throw in a hike in interest rates – sure, all these little chips to higher education affect me (an undergrad biology student) directly. But when college becomes less economically feasible as the quality of our education stagnates, we all pay the price. (Andrew R., Flag, AZ)
It’s a well-known fact that the people with the most spare cash lying around are, indeed, grad students. My college knows this, because they keep asking me for donations every other week…..
As a grad student in public policy, I’m amazed that the political leaders want to lower the deficit by squeezing pennies out of grad students, rather than get millions of dollars in actual owed taxes from corporations who are using loopholes to escape their actual governmental obligations. Pretty sweet deal, these CEOs have. I think grad students need to get it together and start lobbying Congress. There must be one or two (tens of thousands) unemployed law grads looking for a job. (Rachel, Chicago)
The Chronicle of Higher Education also observes that, while Pell Grants have been saved for now, it’s only a “temporary reprieve”:
Given that House conservatives vehemently oppose tax increases, it’s likely that the committee charged with reducing the deficit will favor spending cuts over revenue increases. That puts Pell grants and the other student-aid programs at risk of cuts in the near future.
The programs could also face cuts or eligibility changes in future years, as appropriators cut programs to comply with the bill’s spending caps.
In other words, forget about graduate school, federal funding for college is not assured. This seems almost tragic, as one commenter on the New York Times Bucks blog says:
Related Care2 Coverage
Pell Grants Are “The Welfare of the 21st Century” Says Rep. Rehberg
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