Harkin’s Pell Grant Cut Proposal Part of Budget Agreement

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Congress is set to cut $303 million in funding for the nation’s largest program that offers the chance to attend college to many of the country’s poorest students, as part of a massive spending package that will keep the federal government open through next year and avoiding a shutdown.

According to the measure first introduced over the summer by retiring Democratic Senator Tom Harkin, Pell Grants would be cut in an effort to free that money to use to pay companies that collect student loans on behalf of the Department of Education.

In the 2013-2014 school year, nine million students received Pell Grants.  Created in 1972, the program gives grants that do not need to be repaid to students who have household incomes of $30,000 or less.  Almost two-thirds of African American undergraduates benefit from the grants, as do 51% of Latino undergraduates.  White House budget documents report almost 8.9 million students set to receive an average of $3,826 from the program this fiscal year.

Student loan supporters worry that although the program currently sees a surplus, making the cuts could create a funding shortfall as quickly as next fall.

“We constantly worry that any spending bill is going to involve negotiations over Pell. We have seen funding shortfalls in the past and Congress always ends up having to find additional dollars elsewhere to fund the program,” said Jennifer Wang, policy director at Young Invincibles. “Why put students in that position again?”

The cuts come during a time of record high college costs, increasing student debt and a decrease in government support for state schools.  According to Shahien Nasiripour for The Huffington Post, cuts to the Pell program at this time could likely end with college students borrowing more money, further increasing the nation’s $1.3 trillion in unpaid student loan bills.

The proposal was introduced in order to increase payments to companies like Great Lakes, who collect student loan payments for the Department of Education.  A budget deal in 2013 had stopped requiring such payments to these companies, causing a funding gap.

Harkin’s staff report that if those companies continue to go unpaid, it may lead to furloughs and an interruption of service to a total of 40 million borrowers currently working to repay their student loans.

In a statement, Harkin supported the bill as a win for the Pell Grants, as it would raise the maximum grant by $100.

“The bill invests in high-quality early childhood care and education, provides programs that support working families, allows for an increase in the maximum Pell Grant award and number of recipients,” Harkin said.