Debt Deal Reached Just Prior to Deadline

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March 10, 2011 · by COHEAO · Spark Notes

The House and Senate passed, and the President signed, legislation to increase the borrowing authority of the federal government on August 2.  Included in the final agreement are provisions related to Stafford Loans and the Pell Grant Program.   In the end, the bill passed on a bipartisan basis in both the House and Senate.  It passed 269-161 in the House and 74-26 in the Senate.

The law provides much needed funds for the Pell Grant Program, but even with the elimination of the in-school interest subsidy on Stafford Loans for graduate students, $24.2 billion in discretionary funds will need to be appropriated for the program in 2012 and 2013 to maintain current eligibility requirements and award levels. 

In addition to the initial student aid provisions shoring up Pell Grants by eliminating this subsidy, there is no doubt education programs (both P-12 and higher education) will be impacted by this proposal.  The special joint commission with equal representation from both parties and both chambers will be looking at every agency, including the Department of Education, for significant cuts to include in its final proposal.