Budget Control Act Makes Student Loans More Expensive
Last night, the House of Representatives passed the Budget Control Act of 2011 and the Senate is expected pass the Act today.
The Act provides for:
- Elimination of the in-school loan interest subsidy for graduate and professional students beginning July 1, 2012.
- Elimination of Direct Loan “repayment incentives” (reduction in interest rates for on-time payments) for new loans disbursed on or after July 1, 2012.
- Additional funding for the Pell Grant program for the next two fiscal years.
The elimination of the graduate and professional in-school interest subsidy and the direct loan repayment incentives are estimated by the Congressional Budget Office to produce a savings of $21.6 billion. $17 billion of that savings will go to shore up the Pell Grant program, and $4.6 billion will be used to reduce the deficit.
Funding for student aid could be subject to cuts again when the joint congressional committee seeks additional savings.
Read more: What Every College Student and Grad Should Know about the Debt Ceiling Deal
Read more: The Huffington Post - Debt Deal Boosts Pell Grant Funding, Cuts Student Loans
