Texas students, already reeling from the Legislature’s recent higher education funding cuts, were hit again by the recent debt deal in Washington. Part of the debt deal just passed in Congress will change the way many students pay for
Federal Stafford loans have been an option for students unable to independently finance their educations since the passage of the Higher Education Act of 1965. These loans, which are offered in limited amounts to eligible students, have the advantage of being backed by the federal government. This means they often carry lower interest rates than what students would be offered by private lenders.
Stafford loans can be either subsidized or unsubsidized. If a loan is subsidized, the government pays any interest which accumulates while a student is in school and for a period of six months after graduation. Unsubsidized loans are allowed to accumulate interest that the student borrower is responsible for paying off either as it accumulates or after graduation.
The Budget Control Act of 2011, the debt ceiling disaster aversion bill, ends subsidized Stafford loans for graduate and professional school students. After July 1, 2012, no new subsidized loans will be available for these students, further increasing the cost of post-secondary education for those students already least able to afford it.
The Congressional Budget Office estimates that the elimination of graduate student loan subsidization will save $21 billion between July 2012 and 2021. Of this, $17 billion will be directed to the Pell Grant Program, which provides aid to low-income students. The infusion will allow that program to remain solvent.
For years, the Department of Education has borrowed against expected future funding in order to be able to give to students the maximum amount: $5,500 per year. It has been running a deficit as the cost of education and the number of eligible students has soared in recent years. The Congressional Budget Office estimates that $38 billion worth of Pell Grants will be awarded in the 2012-13 academic year, compared with $26 billion during the 2009-10 year.
Despite the debt-deal infusion, funding for the Pell Program will still fall $1.5 billion short. The Chronicle of Higher Education reports that this remaining funding gap has caused concern among financial aid professionals that more student aid programs will soon be on the chopping block to save Pell Grants. Alternatively, they worry the program will be restricted either in terms of award amount or eligibility.
To put the estimated savings into perspective, the Obama administration estimates that the nation’s wars in Iraq and Afghanistan will cost almost $160 billion in the next fiscal year. The continuing military operations in Libya cost around $40 million per month, according to the U.S. Department of Defense. Added together, the nation’s active military engagements currently cost over $13 billion per month.
With the exception of action in Libya, the wars are being scaled back. But continuing the wars for only the next month and a half will eliminate the savings from cutting subsidized Stafford loans for graduate students. If the amount of savings to be diverted to bail out the chronically underfunded Federal Pell Grant Program is subtracted, the total amount of federal deficit reduction, about $4 billion, will be used in these conflicts in the next 10 days. Ten years of painfully extracted savings will be negated in 10 days.
The comparison to military spending may be criticized, quite reasonably, as unfair. But the comparison supports a broader point, especially considering recent education cuts in Texas. Education is being wrongly marginalized in these
The lack of federal support for student financial aid comes as yet more gloomy news to Texas students, who have seen funding for the TEXAS Grant Program and for public higher education cut as the state government grappled with its own budget crisis earlier this year.
The TEXAS Grant program provides aid to low-income Texas students. According to The Texas Tribune, as a result of this year’s cuts, 43,000 students will see less aid money from the state over the next two years.
The recent legislative session also saw state funding for higher education decrease by more than 9 percent. These cuts will likely translate into higher tuition as state universities try to make up the funding gap.
Sadly, it has become a tired cliche that young people don’t vote. Many commentators cynically labeled the spike in youth turnout during the 2008 election a fluke.
Unfortunately, turnout in the 2010 election largely vindicated that view.
The only real way to get politicians to remember students when money is tight is if they know we’ll remember their actions at the polls. So next November, to send the message that these misplaced spending priorities are unacceptable, let’s all vote.
Daley is a biology and government senior.