While Congressional budgets tend to be mostly a political statement, the members of Congress who crafted the House and Senate’s Fiscal Year 2016 budget plans are making a very clear statement: They are not standing with students and are not working to make college more affordable. The budget plans that came out of the two chambers of Congress last week would, instead, cut back on Pell grants and increase student debt.
While members of Congress have used language like “balancing the budget” and “[improving] economic growth and opportunity for hardworking families,” the budgets call for the same old prescription that has failed and hurt middle- and low-income Americans: more cuts and tax breaks that only benefit the wealthy.
While college is still widely understood to be the ticket to socioeconomic mobility, it has become less and less accessible to lower-income Americans. Both House and Senate budget plans slash a historically important program that has helped make college more affordable: Pell grants.
“There’s no scenario in which freezing Pell Grant awards (which has the effect of decreasing the award, because inflation) is a good idea,” writes Mark Huelsman, senior policy analyst at the progressive think tank Demos.
Huelsman says that research has shown that grant aid increases college enrollment, retention, and completion. The rhetoric of members of Congress who say they want to help “hardworking” Americans is incredibly misaligned with their budget plans. “If your priority is getting more students into and through the higher education system, Pell Grant is great at doing that!” says Huelsman. “If that is not your priority, you should simply say that.”
The Pell grant is pegged to inflation until 2018, but the cost of attending a public four-year college has doubled in the last three decades, adjusting for inflation, and the amount of tuition the Pell grant covers has fallen behind. “Freezing the award would just exacerbate the problem,” says Huelsman.
According to Pauline Abernathy, Vice President of the Institute for College Access and Success, effectively cutting Pell Grants over the next ten years would force millions of lower-income students to borrow more in loans, drop out, or skip college all together.
“Eighty-five percent of all Pell Grant recipients have family incomes of $40,000 or less,” says Abernathy. “88 percent of Pell recipients who graduate from four-year colleges already have student loans and owe an average of $4,750 more than their higher income peers.”
Additionally, both budgets would charge interest on student loans while students are still in school. This could especially impact students who are already in need. According to the Congressional Budget Office, if this change were to occur, borrowers with $23,000 in subsidized loan debt would owe an extra $3,800 in accrued interest upon leaving school. This could mean students could owe thousands of dollars more over their loan repayment.
To make matters even worse, the House budget would eliminate new enrollment in the Pay as You Earn repayment program, which caps monthly loan payments at 10 percent of a borrower’s discretionary income and discharges debt left over after 20 years of on-time payments. The House budget would also repeal the Public Service Loan Forgiveness program for new borrowers, which forgives the debt of public servants like teachers, police officers, workers in government or nonprofits, and members of the military after ten years of repayments and service.
The proposed House and Senate budgets are more symbolic than anything, but should be very concerning for not only students and families. In a moment when the country’s employers are demanding more and more college graduates as the cost of college soars, “balancing the budget” with deeper cuts to higher education would have devastating effects on the country’s economy.