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

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