Money for College May Dwindle for Students

Money for College May Dwindle for Students

The maximum Pell Grant is presently $5,500 for the 2010-2011 college year. In the beginning of February, House Republican Leaders proposed cutting the maximum grant by $5,500 to $2,310 in the 2011-12 college year. President Obama opposed this cut, suggesting that other student aid programs be cut to maintain the maximum Pell Grant, a grant available only to the neediest students.

Obama's suggestions included cutting year-round Pell Grants as well as eliminating subsidized interest on graduate and professional student loans. Eliminating the year-round Pell Grants could save 8$ billion. This Pell Grant first became available during the 2009-2010 school year. This program is turning out to cost ten times more than was anticipated as well as being used mainly by students attending private colleges.

Eliminating subsidized grant programs for graduate and professional students could heavily burden students who take these loans. It could potentially increase a student's debt by 20%, a large increase no matter how much the debt is, but particularly large considering the amount of graduate and professional student loan debt.

The United States Department of Education will also be offering the 6 million students who have loans that are part of the federally guaranteed program as well as loans under the Direct Loan program an incentive to move their federally guaranteed loans into the Direct Loan program. It could save these students up to 2% on the balances of their loans.

President Obama's 2010 Health Care and Education Reconciliation Act was meant to stabilize funding for the Pell Grant. However, the $20 billion in savings realized by the changeover to Direct Lending by the government and meant to go towards the Pell Grant Program went towards deficit reduction instead.

As a result of the poor economy, and due to an increase in the maximum grant, there has been a 45% increase in students receiving Pell grants from 6.1 billion in 2008 to 8.9 million in 2010. The average Pell Grant has also shown a 39% increase from $2,970 to $4,115. Now the Pell Grant is showing a $20 billion shortage of funding.

Another result of recent economic woes is the number of students filling out a FAFSA or Free Application for Federal Student Aid. There has been a more than 30% increase in students applying for the FAFSA for money for college in the past three years and many of these students qualify for a Pell Grant.

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