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Senate Protects Pell but Trims Loan Subsidy

September 26, 2011

While the President and Congress provided funding in the recent debt ceiling agreement to help sustain the maximum Pell Grant award for students in the 2012-2013 academic year, there have been remaining concerns about the ability of budget writers to fully fund the Pell Grant maximum award at a level of $5,550. Senate budget writers recently advanced a plan protecting the maximum award, but at the expense of the subsidy on interest accrued during the six-month grace period on undergraduate loans.

Over the past year, there has been an erosion of other student aid benefits as legislators eliminated LEAP funding, year-round Pell Grants, the in-school interest subsidy for graduate students, and student loan repayment incentives in order to cover the Pell shortfall and contribute to deficit reduction.

In July and again this month, House appropriators postponed scheduled mark-ups of the FY12 Labor, Health and Human Services, and Education appropriations bill and no draft legislation has been made available to date. The Senate Appropriations Committee approved their measure, in which the Education Department would get $68.4 billion, a 0.12 percent increase over FY11, along party lines, 16-14.

Congress is not scheduled to be in session this week, but may need to meet in order to pass a temporary spending measure because budget writers have not finalized the FY12 spending bills. The FY11 budget expires on September 30 and until a temporary continuing resolution is in place, the possibility of a government shutdown beginning on October 1 looms. The major disagreement between the House and Senate has been over the level of funding for emergency aid and whether offsets are necessary.


Liz Clark
Senior Director, Federal Affairs