student debt

Congress Cuts Aid for Student Grants…Gives the Money to Student Loan Contractors

As the United States government prepares its budget for the next year, and attempts to avoid another shut-down, Congress has agreed on a bill that would cut $303 million from the nation’s largest source of student grants, and would give it to student loan contractors.

The Washington Post reported that the measure was “championed by Senate Democrats,” and intends to cut funding to the $33.7 billion Pell Grant program, which aided nearly nine million students in the 2013-2014 school year.

According to the Huffington Post, the money that is taken from the Pell Grant program will be given to the Department of Education’s loan contractors, who will “get up to $721.7 million,” which is a “nearly $44 million increase” from the 2013 fiscal year.

Budget documents from the Department of Education show that during the 2012-2013 school year, three out of every four students who received funding from the Pell Grant program came from households with less than $30,000 in annual income, and were given an average $3,826 from the program.

The Huffington Post reported that this change “comes at a time when the Education Department’s loan servicers are under intense scrutiny,” from Federal officials who have “accused them of mistreating borrowers and hurting taxpayers.

The proposal to decrease funding to the Pell Grant program, giving it to student loan contractors instead, was first introduced over the summer by Senator Tom Harkin, a Democrat from Iowa and the outgoing chairman of the sub-committee on education.

Harkin released a statement saying, “This bill takes a thoughtful approach to funding these critical programs because it funds America’s priorities and it is how we invest in our future.”

According to the Washington Post, Harkin’s “history of advocating for college affordability,” has made student advocates “disappointed that he would jeopardize such a critical source of education funding.”

Jennifer Wang, the policy director for Young Invincibles, an advocacy group that encourages young adults to become more educated and involved in politics, said that whenever a new spending bill is introduced, the group is constantly worried about what implication it might have on the Pell Grant program.

We have seen funding shortfalls in the past and Congress always ends up having to find additional dollars elsewhere to fund the program,” said Wang. “Why put students in that position again?”