How Will the Budget Affect Students in Your State?
The proposed budget would tie Pell Grants to inflation to maintain purchasing power.
As part of his federal budget proposal for 2010, President Obama included a bold plan [PDF] to expand and reform the Pell Grant program by enacting common-sense student loan reform.
The Pell Grant is the largest and most critical federal grant program for students that demonstrate financial need, and more than 5.1 million students benefited from the program during the 2006-07 school year. Unfortunately, the program must currently rely on the annual budgeting and appropriations process for funding, which means that award levels often fail to keep place with inflation or college costs. The result has been a steep decline in the purchasing power of the grant. In 1976 the maximum Pell Grant covered 72% of the average cost of attendance for a public four year college, but this figure fell to 33% by 2006.
Obama’s plan would make the Pell Grant a mandatory program, meaning that it be removed from annual exposure to unpredictable political whim, raise the maximum Pell Grant award level by $200 for the 2010-11 school year, and tie the maximum grant level to one percent above inflation, so that the grants purchasing power will be better protected from rising college costs and inflation. The Institute for America's Future and the US Public Interest Research Group estimate that 260,000 more students could receive the Pell Grant if these reforms are enacted.
The proposal can be paid for in part by student loan reforms, which will save taxpayers an estimated $94 billion over ten years, while making the student loan system less corrupt and more reliable for students.
A tentative agreement was reached by lawmakers in the House and Senate on the budget today, which would allow for budget reconciliation for student aid. The agreement must now be approved by the conference committee and both chambers of Congress.
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