2012 Budget Includes Changes for Pell
December 13, 2011

Congressional negotiators are close to reaching agreement on a $1 trillion budget for the federal government in 2012, with a vote expected by the end of the week. The measure would draw from competing House and Senate budget plans to pay for the Pell Grant Program, enacting changes to both the grant program itself and to subsidized undergraduate student loans.

The six-month grace period on subsidized student loans, in which the government currently pays the interest after a borrower leaves college, would be eliminated, saving about $400 million for the fiscal year. The length of time over which a student can be eligible for a Pell Grant would reportedly also be cut to 12 semesters from the current 18, which would affect about 62,000 students, according to a lobbyist with a higher education association. Students without a high school diploma or equivalent credential will also reportedly be barred from receiving Pell Grants, and the family income at which the government would expect a recipient of federal financial aid to contribute nothing to the cost of his or her education would drop from $30,000 to $20,000 per year.

Senate Democrats had proposed the change to the interest rate subsidy; the other cuts were drawn from a House Republican budget plan. But other proposed cuts in the House plan would not be enacted, including a proposed change to the income protection allowance that the American Council on Education estimated could affect up to 400,000 students.

Full details on the final bill are expected today.

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