Senate Budget Would Preserve Pell

A Senate panel approved an Education Department budget that would sustain the maximum Pell Grant in part by ending subsidized interest during student loans' grace period.
September 21, 2011

WASHINGTON -- A Senate subcommittee on Tuesday approved a budget for the Education Department in fiscal year 2012 that would again preserve the maximum Pell Grant at $5,550 -- this time at the expense of subsidized interest on undergraduate student loans during a six-month period after students leave college.

The Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education and Related Agencies voted 10-8, along party lines, for a $68.4 billion allocation for the Education Department in the 2012 fiscal year, which would represent an $80 million increase from 2011. The full Appropriations Committee will vote on the measure today.

In preserving the maximum Pell Grant, the subcommittee upheld the Obama administration’s top priority in education funding for the upcoming fiscal year. Subcommittee staff did not release full details of the spending measure Tuesday. But it appeared to preserve funding at 2011 levels for several programs important to higher education, including Supplemental Education Opportunity Grants, federal work-study programs and the TRIO program, in addition to the maximum Pell Grant. It would also continue $100 million in funding for the Workforce Innovation Fund, which is intended to help improve job training programs, including some at community colleges.

The bill would also provide $30.5 billion for the National Institutes of Health, a cut of $190 million from 2011, and create a new center, the National Center for Advancing Translational Sciences, dedicated to applying biomedical research to cure diseases.

The 2011 budget “cut all the fat and went into the bone,” Senator Tom Harkin, an Iowa Democrat and the committee’s chairman, said at the beginning of the subcommittee’s markup Tuesday. “In this bill, we get into the marrow.” Still, he listed the preservation of the maximum Pell Grant as a major accomplishment.

The deal reached in August to raise the federal debt ceiling included funding for Pell Grants, guaranteed in part by ending subsidized loans for graduate students. But the program still required some discretionary spending to close a projected shortfall for 2012.

The budget the panel approved Tuesday would cover that shortfall by ending the current practice of the government paying the interest that accrues on undergraduates' loans in the six months after they leave college, after which they must begin repaying their loans. Under the proposed change, borrowers would still have the six-month grace period before repayment begins, but they would be responsible for the interest that accrued during that time.

The change would save the government slightly less than $6 billion over 10 years.

Subsidized interest during the grace period is the latest program to be sacrificed to keep Pell Grants alive, following subsidized graduate loans, year-round Pell Grants, and LEAP grants, which provided grants to states for need-based financial aid.

Several higher education advocates said they did not want to comment on the budget until full details are released after today’s committee vote. While they said they were very pleased with the outcome for Pell Grants, some said they were concerned about paying for the measure in part by making subsidized loan borrowers pay more.

“Obviously we’re now in the trend of looking for offsets from Pell authorization or other student aid provisions to pay for Pell Grants,” said Cynthia Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities. “There does come a point when there are no provisions left to utilize.” Still, she praised the subcommittee for appearing to preserve most higher education programs in a difficult budget situation.

The federal fiscal year ends Sept. 30, meaning spending bills for 2012 are on a tight deadline. A continuing resolution that would provide funding through Nov. 18 is expected to be voted on this week, and would give Congress a few more weeks to consider an omnibus spending bill for 2012.


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