OBAMA, HOUSE G.O.P. PROPOSE CUTS TO PELL GRANT PROGRAM IN 2012 BUDGET
OWEN HEMSATH
PRIDE STAFF WRITER
Students depending on Pell Grants will have to look at other options to pay for school next year.
The maximum amount a student can receive from a Pell Grant is $5,550 and the grant is unlike a loan, the money does not need to be paid back, according to the website www.studentaid.ed.gov. Additionally, some Pell Grants include an in-school interest subsidy, which means the government pays the interest on loans separate from the student’s Pell Grant up until six months after the recipient has graduated. These features combined make the Pell Grant an attractive funding option for students seeking higher education.
Watchers of CNN last week saw that President Barack Obama, along with House Republicans, have each proposed separate budget plans for the 2011-12 fiscal year that, if approved, would include initiatives to cut the federal Pell Grant program. Currently the program faces a $20 billion deficit.
The budget posted on the White House website explains that the president’s cuts would eliminate the in-school interest subsidy for graduate students and limit the total number of recipients receiving year-round aid, while the House cuts would reduce the total maximum amount of the aid. The leaders have introduced their respective plans to address the program’s deficit, and CSUSM officials say that both plans have the potential to affect CSUSM students.
“From a higher education standpoint, cutting student loans for aid for low income needy students is not a good solution… any reduction in that puts education in jeopardy for one student, several students, a multitude of students, and that’s a concern for our university,” said Christine Vaughan, a Communications Specialist, from the Office of Communications at CSUSM.
About 3,600 students at CSUSM receive Pell Grants and more than 1,800 receive the full award amount, which puts the average award per student at $2,000, according to Vaughan.
Mark Kantrowitz, who is a financial adviser and contributor for www.fastweb.com, reported, “[I]f the funding shortfall is not addressed, the maximum Pell Grant will drop from $5,550 to $3,240 in 2011-12, a total decrease of $2,310. To avoid this, the president is proposing to cut other student aid funding such as yearround Pell Grants and subsidized interest on student loans to graduate and professional students.
“Under the president’s proposal, the maximum award would remain at $5,550 while cuts would be made in other areas. The year-round benefit typically only affects for-profit colleges, which are more likely to have students studying year-round without a summer break,” explains Kantrowitz.
Eliminating the in-school interest subsidy will likely have a greater impact on CSUSM students as education begins to cost more.
Kantrowitz writes, “…losing the subsidized interest benefit will add $1,676 to each $8,500 loan balance by the time the student enters repayment, a 19.7% increase. This adds more than $3,333 to the debt burden of graduate and professional students who graduate with a typical [loan] amount.”
The proposal by President Obama comes three days after the House Republicans suggested to lower the maximum award of $5,550 to $4,015 a move Kantrowitz describes as “…part of a larger package of budget cuts that seek to cut spending by $100 billion for the remainder of the current fiscal year.”
These significant changes mean that CSUSM can potentially face losing around $7.2 million in tuition. The institution plans to send congress a joint letter signed by three other university presidents urging congress not to approve any cuts. Vaughan also recommends that students interested in taking action against these cuts “[F]irst and foremost contact their representatives and let them know that students have a voice and that they be heard.”
CSUSM Official statement: We are deeply concerned about the proposed cuts to Pell Grants and both the short and longer impact these cuts would have on our students and our region. Well over 3,000 CSUSM students receive Pell Grants to fund their college education. Without Pell Grants, a large number of students may not have the means to continue their college education denying our region a pool of skilled and educated workers.
Photos courtesy of applyforpellgrant.com and media.mlive.com