The debt ceiling agreement reached by President Obama and Congress isn’t generating much enthusiasm in Washington, D.C., although education advocates note that it would provide a short-term financial fix for the heavily used Pell Grant program.
The Budget Control Act of 2011 would chop $2.4 trillion in federal spending over 10 years and raise the nation’s debt ceiling until 2013, avoiding a potentially catastrophic U.S. default. The cuts would include $900 billion achieved through spending caps—largely shared by domestic and defense programs—plus another $1.5 trillion to be decided by a “super committee” of 12 members of Congress this fall.
One silver lining in the agreement is protection for students receiving need-based aid under Pell, which is running an $18 billion shortfall due to heavy use in the recession. Pell is one of the few programs specifically mentioned in the agreement, as the government would reallocate other funds to provide the program with an extra $17 billion in 2012 and 2013.
Education advocates say the move will address most of the shortfall and could allow the government to continue offering a maximum grant of $5,550 for the neediest students.
“The Pell Grant gets a pretty big influx of cash,” said Jason Delisle, director of the Federal Education Budget Project at the New America Foundation in Washington, D.C. “But it still doesn’t guarantee the maximum will be available this year and next,” he told Diverse.
The new Pell funds also come at a cost. The $17 billion isn’t new money; instead, lawmakers eliminated the in-school loan interest subsidy for graduate students and incentive payments for students who were on time in paying off their loans.
“It’s definitely bittersweet,” said Victor Sanchez, president of the United States Student Association. “Pell is definitely important to our students, but there is frustration that other programs are being cut,” he told Diverse.
Higher education programs also face additional budget challenges this year. To meet the initial requirements of the 10-year budget caps, Congress could reduce by $1 billion the 2012 budget for health, K-12 education, and higher education and employment programs, Delisle said. That could happen as soon as September during Congress’ annual appropriations process.
While the $5,550 Pell Grant is “symbolically important,” Delisle said, “it may basically rob any other education program from getting an increase.”
K-12 and higher education also are at risk when the 12-member “super committee” of lawmakers meets to find ways to find another $1.5 trillion in budget savings.
Should this panel fail to come up with at least $1.2 billion in cuts, the Budget Control Act then calls for automatic across-the-board budget cuts. While some programs for low-income Americans such as Pell would be exempt, the Education Department would face a 6.7-percent funding decrease, or about $3 billion, Delisle said.
After weeks of bitter debate, the House and Senate did approve the final debt ceiling package by large margins. However, many members of the Congressional Black Caucus and Congressional Hispanic Caucus strongly opposed the measure, saying it would make significant cuts without any revenue increases or a closing of tax loopholes.
On his Twitter feed, Rep. Emanuel Cleaver, D-Mo., the CBC chairman, called the debt ceiling bill “a sugar-coated Satan sandwich.” He also expressed concern that only a few lawmakers will sit on the super committee after just a small number participated in the final debt ceiling talks.
“I am concerned about how few have made decisions that will affect the lives of so many,” Cleaver said.