Turns out the budget outlook for student aid is even bleaker than it seemed.
On Tuesday, Republican leaders in the U.S. House of Representatives released a spending blueprint that would freeze the maximum Pell Grant for 10 years and roll back some recent expansions of the program. On Wednesday they revealed that their plan would also abolish the in-school interest subsidy on Stafford loans, reverse a recent expansion of income-based repayment, and end public-sector loan forgiveness.
Those cuts in the federal student-loan programs don’t appear in a budget document that the House Budget Committee released on Tuesday. But when Rep. Mark Pocan, Democrat of Wisconsin, asked during a markup session on Wednesday if such changes were assumed in the measure, a committee aide confirmed that they were.
Taken together, the three changes would save taxpayers more than $61 billion over 10 years, according to budget estimates. But they would also make student loans more expensive for borrowers.
Republicans have proposed similar cuts in the Pell and student-loan programs in past budget blueprints, to no effect. But this year is different because the party now controls both chambers of Congress.
On Wednesday student protesters disrupted a hearing of the Senate Budget Committee, carrying signs and chanting “no cuts, no fees, education should be free.” The protesters were escorted out of the hearing by Capitol police officers, and seven people were arrested, according to Maxwell Love, president of the United States Student Association, which organized the protest.
Subsidized Stafford loans, which do not accrue interest while the borrower is in college, are available to undergraduate students from low- and moderate-income families. About half of the Stafford loan volume to undergraduates last year was in subsidized loans.
Charging needy students interest on their loans while they are still in school would cause a student who entered college this coming fall and borrowed the maximum $23,000 in subsidized loans to pay an additional $5,000 over a standard 10-year repayment period, according to the Institute on College Access and Success. Students who repaid over a longer period would pay even more.
The Senate’s budget blueprint, released on Wednesday, would not explicitly freeze Pell Grants for 10 years, but, like the House bill, it would eliminate mandatory money for the program, subjecting it to the annual appropriations process. That’s how the program was financed until recently, but some advocates worry that a shift back to 100-percent discretionary funding would make Pell Grants vulnerable to budget cuts.
Kelly Field is a senior reporter covering federal higher-education policy. Contact her at kelly.field@chronicle.com. Or follow her on Twitter @kfieldCHE.