Magazine article University Business

Bush Budget Boosts Pell Grant but Cuts Loan Subsidies: Overhauling Financial Aid Is on the Agenda

Magazine article University Business

Bush Budget Boosts Pell Grant but Cuts Loan Subsidies: Overhauling Financial Aid Is on the Agenda

Article excerpt

IT IS FEDERAL BUDGET TIME AGAIN, BUT THIS YEAR THE PROPOSED numbers stand to shake up the status qua in higher education. President Bush's proposed 2008 $56 billion education budget includes a plan to cut, among other things, about $18.8 billion in federal subsidies to the banks and financial institutions that make college loans. These federal subsidies have been the target of criticism for several years, but they will now be addressed by a proposal that takes the savings and pours them into the Pell Grant program--boosting the latter by about $20 billion. If the president gets his way, the maximum annual Pell award would climb from the current $4,050 to $5,400 by 2012.

Before that happens, though, the budget will have to be approved by a Democratic-controlled Congress whose leaders are already at work on revamping education funding, but who are not entirely in step with Bush's plans. Sen. Edward Kennedy (D-Mass.), chair of the Senate Health, Education, Labor, and Pensions committee, told the press that while cuts in subsidies to student loan lenders are long overdue, he will fight the president's other money-saving proposals. Namely, he opposes the president's plan to cut the Supplemental Educational Opportunity Grants (SEOG), the Perkins program, the Leveraging Educational Assistance partnership (LEAP), and the Robert C. Byrd Honors Scholarships. The American Council on Education estimates that these cuts would free up $942 million for other higher ed student aid programs, yet cautions that cuts will hurt students in the short term. …

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