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 New Debt Ceiling Bill Provides Additional Funding for Pell Grants 

8/1/2011

The House and Senate are scheduled to vote today on a deal reached late Sunday that would raise the federal borrowing limit while requiring new spending cuts. After several days of heated debate and tough negotiations by the White House and congressional leaders, agreement was reached on the Budget Control Act of 2011. This legislation would eliminate in-school interest subsidies on federal student loans for graduate and professional students and provide $17 billion of the savings to the Pell Grant program. With record growth in Pell Grant recipients and other program changes, the program currently faces a shortfall of $11 billion. The bill would provide $10 billion for the Pell Grant program in FY 12 and the balance will help fund the program in FY 13.

While spending cuts may still impact other community college priority programs, it appears quite possible that the $5,550 Pell Grant maximum will be preserved for the next award year.  This is tremendous news for the 3 million community college students who rely on Pell grants annually to help pay for their tuition, fees, books, equipment and living expenses. It is also a testament to the fierce efforts undertaken by community college advocates.

The debt deal calls for an increase in the debt ceiling by $2.1 trillion, eliminating the need for further increases until 2013. It provides 10-year discretionary spending caps in order to generate $1 trillion in deficit reduction, with cuts expected in both defense and non-defense programs. These limitations on discretionary spending will make it extremely difficult to secure needed resources that benefit community colleges and their students.

The legislation also calls for the creation of a bipartisan Congressional committee to identify an additional $1.5 trillion in deficit reduction by Nov. 23, and for Congress to vote on the committee’s recommendations within 30 days. Absent agreement on at least $1.2 trillion in cuts, automatic cuts would be imposed in 2013 on defense and non-defense discretionary, as well as some entitlement programs. Under this scenario, education and job training programs would be cut by 6.7%, although Pell grants would be exempted.

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