The recent restructuring of the federal student loan program was designed to roll the resulting savings into increased Pell Grants so the nation’s poorest students could afford the skyrocketing cost of college.
It was not intended to create a piggy bank for politicians to raid as they thrash around in an effort to come up with a deal to raise the country’s $14.3 trillion debt ceiling.
Yet, that appears to be a possibility as the Aug. 2 deadline approaches for forging an agreement on raising the borrowing limit.
While it is true that the nation faces difficult and uncomfortable choices in reducing the country’s debt in the coming years, such decisions must be equitable. And this idea has a decidedly unfair air about it.
The student loan program was overhauled last year, taking private lenders out of the equation. For years, those lenders had made huge profits from student loans while assuming little risk. That’s because the government guarantees loan repayment up to 97 percent.
In cutting out the middle man, the resulting savings have been projected to be about $67 billion over a decade. Let’s keep in mind where that “profit” actually comes from — students who are repaying their loans with interest.
We were glad to see the student loan overhaul pass Congress. Some $20 billion of the savings was directed toward reducing the federal deficit, which was part of the original deal, but Congress used much of the rest to boost the maximum Pell Grant to its current $5,550.
The grants are need-based, and only the poorest students get the maximum. Increasing the grant was an important move to keep college affordable for them.
Established in 1972, Pell Grants initially covered more than two-thirds of tuition and fees charged by public, four-year universities. As college costs increased, the maximum grant covered about half of such expenses in the 1980s. Most recently, it paid for only a third.
The recent recession has meant more students looking for an education or retraining, particularly at community colleges or open enrollment colleges, and more demand for Pell Grants.
Despite this need, a recent budget passed by the House included cutting the maximum Pell Grant by 45 percent, and tightening eligibility so that 1.5 million students would no longer qualify.
For a large number of low-income young people, getting a Pell Grant is the difference between going to college and forgoing higher education.
Perhaps there are ways to better screen potential recipients to ensure they’re serious about getting an education, or to demand efficiencies from colleges. But we surely hope the federal Pell Grant program, crucial to bringing a measure of affordability to higher education, isn’t a casualty in the debt ceiling war.