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Debt-Ceiling Deal Provides $17-Billion for Pell Grants

July 31, 2011, 10:11 pm

The White House and Congress reached a deal Sunday to raise the nation’s borrowing limit and shrink the federal deficit, just two days before the August 2 deadline.

The agreement, which the president announced late Sunday, would cut $1-trillion right away and create a committee to reduce the deficit by another $1.5-trillion by November, according to news reports. If approved by both chambers of Congress, it will avert default on the nation’s debts and ensure that the government has enough money for federal benefits, including student aid.

Like the House’s version of the bill, it would provide $17-billion for the Pell Grant program, which is expected to run an $11-billion shortfall this year. The Senate had proposed $18-bilion for the program. It’s unclear if the agreement would end the in-school subsidy on federal loans to graduate students, though it’s likely, since both the House and Senate supported the idea.

Regardless, the measure offers only a temporary reprieve for the Pell program. 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. —Kelly Field

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  • clarinetsarethebest

    I think this is the Facebook group that best exemplifies your article’s target.

    “A prince gets married, the bad guy is dead. It’s a real Disney weekend.”

  • supertatie

    Laurie, I am as patriotic as they come. And I am not sorry that Mr. bin Laden is no longer with us. But I felt only sorrow and shock when his death was announced. And that had nothing to do with not thinking he had it coming (which he had to know), or being anything other than amazed at the men who pulled off the attack.

    I can’t explain it, except to say that violent deaths – even when well deserved – always cause me great sorrow. And it also drove home that it would not bring back the 3900+ people who died 10 years ago.

    Again, I say none of this as a criticism of the covert opps that brought down bin Laden. Perhaps as I get older, I think about the grave responsibility that people (like, in this case, the President of the United States) have when they know they are sending someone to their death.

    At those moments, I would not trade places with President Obama for all the money in the world.

  • Guest

    Well let’s hope for the best. I still think federal student loan programs are as much in need of a shake-up and reform as other parts of government. $17 billion is not small change. And Freddie Mac and Fannie Mae should remind us of what can happen when the federal government is the backer of loans absent realistic checks on the services or equities being serviced by the loans (i.e., sky-high tuitions or inflated real estate). We may need to take some pain up front rather than let the whole system blow up later.

    I wish the Republicans would admit the Bush tax cuts were disastrous and the Democrats would admit the stimulus of 2009 was a fiasco. If only both parties would give up their self-flattering narratives of recent history, we could have some creative solutions going forward. But I won’t hold my breath.

  • captain_chronicle

    It really doesn’t make too much of a difference anymore – there’s no intrinsic value in currency because it’s no longer representative of any value that “backs” it. The Democrats are spending money like drunken sailors currently. Those who manufacture things and those who provide services will have to raise prices to accommodate the loss of real value in this country. I can’t see how this spend-fest compares to tax cuts. Perhaps the really bad things about the Bush cuts was that the size of government went up at the same time – who’s going to pay for that?

  • feudipandola

    Robert Oscar Lopez nailed it.  The public is sick of all the posturing on both sides.  Childish is one word that comes to mind.  No nation can survive if it spends $1.40 for every dollar it takes in.  I understand the purpose of debt, and it is NOT to provide day to day subsistence for $307 million people.  Maybe we shouldn’t have a balanced budget amendment, but we surely need a debt cap based on GDP that is much, much lower than where we are now.

  • http://www.facebook.com/profile.php?id=1259946447 Mack Hagood

    Apparently, in the eyes of the president, a “balanced approach” to the economic crisis caused by wealthy elites involves graduate students picking up part of the tab while the rich do nothing. I suppose it’s just unthinkable for the government-subsidized banks to take over the government subsidy of in-school interest for grad students. I suppose it wouldn’t be worth the Chronicle’s time to be shouting from the rooftops about this. Instead, let’s just strap a few more thousand dollars of debt onto the backs of the indentured servants who make higher education possible in this country. 

  • 11232247

    Washington promises of future budget cuts beyond any current congressional term are chimera; pure and simple. They are what Senator Daniel Patrick Moynihan once called “Boob bait for the bubbas.”

    Hang on folks. The academy is about to learn what happens when the “can” finally meets “the end of the road.”

  • procrustes

    It is hard to see how subsidizing the production of more adjuncts/unemployed people with advanced degrees serves the public good.  Don’t confuse what you perceive as your own good with that of the public.  And no, Procrustes doesn’t belong to the Tea Party.  He would rather see the available public money go to single-payer, national health, a true public good.

  • atana09

    A country may not survive more than a 1:1.40 revenue disparity. One of the reasons we got to this point is the long discredited mantra that lower taxes provide more jobs and revenue. First a stunning number of corporations pay no federal taxes a situation not changed much since the 2008 GAO report which indicated 2/3rd’s of large corporations effectively paid no tax. And the situation has not improved as shown by Sen. Sander’s recent list of the most blatant corporate tax evaders. The second problem is that some 40% of the US economy is now dominated by the speculative/extractive wealth sector, and they do not need the middle class for their wealth production because this sector does no real production. So no jobs from the no paying tax brigade.
       The Pells being held at 17 billion, that’s still a 11 billion shortfall. And when the 1 trillion of immediate cuts take effect its assured that other forms of  driect support for academe will drop right through the floor. And for those of us in academe who believe we are safe in the ivory towers, these cuts will begin to hit our students heavily and likely the economic and job losses they entail will end the brief flurry of depression related enrollment increases.
      Obama the great compromiser may have got the debt ceiling issue resolved but has done so on the backs of a already shattered middle class. Perhaps Obama needs to look more closely at his advisors a high proportion of whom were drawn from such as Goldman Sachs (who paid an effective tax rate of 1.1% last year).
      Perhaps its time for our president to remember that his ‘Hope and Change” slogan was not the exclusive property of Wall Street, and that its well past time for the few to start to pay for the bounty that they extract from our economy.
      Since Eisenhower is so often mentioned in this debate, it would be good to remember that this was the man who finished the interstate highways, supported expansion of public education, and warned of undue influence of corporations on US policy.
      If academe still has a role in this situation, it may be to remind people what happens to nations which concentrate a undue amount of wealth and influence towards a very small minority.

  • http://www.facebook.com/profile.php?id=1259946447 Mack Hagood

    This affects all graduate and professional students in need of loans. Perhaps you don’t see a large and diverse population of white-collar workers as a public good, but please don’t attribute that to any confusion on my part.

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