"The Obama administration predicted serious cuts in Pell Grants for low-income students due to health-care legislation"

Officials in Washington moved to quickly overhaul the federally funded student loans programs last week as the Obama administration predicted serious cuts in Pell Grants for low-income students due to health-care legislation.  As politicians worked to fix the student-loan bill, many worried that it would cause ramifications concerning the ongoing healthcare plan.

One of the integral parts of the revamped student loans program is that there would no longer be any private lenders’ involvement in the loans’ origin.  The sole provider of the loans would be the Education Department through entirely government backed programs.  Borrowers who fail to pay back their loans would then be sought out by specific companies hired to make sure the loans were seen through.

Administration officials told The Wall Street Journal that the Pell program would be cut by nearly 60 percent in the fall of 2011 if the student-loan bill is not revised properly.  Currently, the program is aimed at handing out $32 million in grants this year to over 8 million low-income students around the country.  Due to inaccurate estimates over the past year the grants have risen from $4,800 to $5,300, which the government will not be able to cover in the future — especially with the rising number of applicants that have driven up the costs.  If the student loan bill is not revamped, it is estimated that the Pell grant ceiling will drop drastically to $2,150 by the academic year of 2011.

The student-loan package is opposed by Republicans in Congress, so the deal has been packaged with the democratic health care reform in hopes that it will be passed more easily.  The deal bundles the student-loan bill in an expedited budget package with the health care proposal and needs to be passed in the Senate with a majority vote.  By itself the bill would have needed 60 votes to pass.

Under this deal, the maximum Pell Grant is projected to rise to reach $5,550 for the 2010-2011 academic year  and would automatically increase due to inflation each year there after.

Though Democrats expected to loose some votes by packaging the two bills, it was a sacrifice they were willing to make to ensure that millions of low-income students can still get the loans they need.

Senator Tom Harkin, a Democrat from Iowa and chairman of the Education Committee, told The New York Times, “Families and students who rely on federal student aid need to know that Congress sides with them and not with the big banks.”  This statement is in response to the legislator’s decision to allow the government to regulate student loans rather than private banks.   Such a decision has resulted in criticism from private banks, which would see a cut off from current revenue with the new, completely government-sponsored student loans program.
The decision to package the student loans program with the health care legislation was a hard decision for many in Washington; still it is believed to be the best option for all parties involved.

Related Articles:

1. Examining Federal Student Aid Overhaul The 2010 overhaul to healthcare legislation simultaneously...
2. Federal Gas Tax on the Chopping Block A decade ago, the September 30th vote...
3. Obama’s Student Debt Plan Falls Short President Obama has recently announced a new...
4. Fall Student Art Show in Bapst Student Art Gallery Currently at Boston College, the Fall 2011...