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August 1, 2011

What Every College Student and Grad Should Know About the Debt Ceiling Agreement

At long last, the folks in Washington have made a deal and student financial aid is hanging in there.  The agreement reached yesterday between the White House and Congress avoids some of the cuts that would have hurt students the most. 

Yesterday’s agreement shores up the Pell Grant program by providing $17-billion in funding, and the White House indicates there will be sufficient funding to keep Pell Grants at their current level of $5,500.  If Pell Grants had been cut, students may well have had to increase their reliance on student loans.  Pell Grants are OK for now, but with spending cuts anticipated in the future, Pell Grants remain at risk. 

The deal does not entirely eliminate the interest subsidy for undergraduate Stafford loans.  However, Inside Higher Education reports that the announced deal eliminates the in-school subsidy on federal loans to graduate students, a measure supported by the House, Senate and White House.  It also eliminates a 1 percent rebate on direct loans disbursed between July 1, 2009 and July 1, 2011, offered as a borrower incentive for on time payment.

Read Heather’s thoughts on the security of Public Service Loan Forgiveness in the forum.

Read more about the agreement and its effect on higher education funding:

Chronicle of Higher Education:  Debt-Ceiling Deal Provides $17-Billion for Pell Grants

Inside Higher Education: Short-Term Stability, But ...

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