Economy

Congress Apparently Wants You To Pay Even More For College

Last week, seven student activists from United States Students Association were arrested during a U.S. Senate Budget Committee hearing. The students were protesting a freeze on higher education funding that had been put forward by Republican lawmakers in a budget proposal released last week. “No cuts, no fees, education should be free,” the protestors chanted before being escorted from the hearing room by Capitol Police. 

During that same hearing Sen. Bernie Sanders (I-Vt.) decried the cuts, saying that the proposed budget would “cut $90 billion in Pell Grants” over 10 years. The plan unveiled by Senate Republicans, with a similar plan in the House of Representative, slashes federal spending and freezes the Federal Pell Grant program.

What exactly are Pell Grants?

"Pell Grants are probably the premiere form of federal grant aid that people don't have to repay," Jennifer Wang, Policy Director at Young Invincibles, told ATTN:. "And the research around Pell Grants show that they do increase college enrollment, but more importantly also increase completion among low- and middle-income students."

Pell Grants -- originally called the Basic Educational Opportunity Grant -- were part of the 1965 Higher Education Act, which itself was part of President Lyndon B. Johnson's "Great Society" program. (They were later named Pell Grants after the late Senator Claiborne de Borda Pell (D-R.I.)) For the most part, the grants are only available for undergraduates -- and only applicable for your first undergraduate degree. Currently, around 8 million students and families who are eligible to receive the grant money for higher education benefit from Pell Grants.

What is the Republican budget proposing?

The budget proposal in the House of Representatives, as laid out by Rep. Tom Price (R-Ga.), Chairman of the House Budget Committee, calls for a freeze on Pell Grants -- keeping the maximum Pell Grant award at $5,775 for the next decade. According to the New York Times, the Senate proposal also includes a freeze on Pell Grants. The plan would also put up more barriers to eligibility -- though the plan lacks specifics -- and threatens the future of Pell Grant funding.

"[The proposed budget] eliminates mandatory funding for Pell Grants and freezes the maximum grant at its current level, instead of allowing it to increase to keep pace with inflation, and makes other unspecified cuts to the program," according to a release from the White House.

Along with cuts to Pell Grants, school interest subsidies are also at stake in the budget proposal. School interest subsidies are available for middle- to low-income undergraduate students. With school interest subsidies, the government pays the interest on a student's loans while they are in school.

Who does this hurt?

Eight million middle and low income students and families would be specifically affected by cuts to Pell Grants and school interest subsidies. However, Pell Grants -- and potential cuts -- have a much broader effect on society.

"I also think this is an issue that is very important for students of color because more than 60 percent of African American undergrads and half of Latino undergrads rely on Pell Grants to attend school," Wang said. "So this is a huge economic concern, but also one that affects already underrepresented young people.

"A college degree dramatically increases a person's employment process and their wages, which is key to strengthening our economy," she continued.

Politicians and the greater population should also take note of the impact that cuts to Pell Grants could have on the millennial generation -- a generation that was economically hit hard by the Great Recession.

"We know that the millennial generation has a lot of concerns about being the first generation to not do as well as our parents have," Wang explained. "We came out of school into the worst economy in decades, and we are still struggling to get back on our feet. We have chronically high young adult unemployment. Most of us have student loan debt."

Will student loans get help?

Speaking of student loans, cuts to Pell Grants could potentially mean more students will take out loans to pay for college. These students would join the ranks of 40 million Americans who have student loan debt -- and no relief from that debt.

"Pell Grants are financial aid dollars that don't need to be repaid," said Wang. "So that means if you shorten the Pell Grant, if you shrink the Pell Grant, if you make the Pell Grant harder to get, which the House budget does, what happens is there will be some people who will feel like they cannot afford to go to college, so they won't apply or they won't fill out a FAFSA or they won't explore their options."

"Another thing that might happen is that people who used to get the Pell Grant might not get it, which would lead them to either drop out or take on even more student loan debt or take on student loan debt for the first time," Wang said. (Wang also cautioned that there are some communities that are debt-averse and that cuts to Pell Grants would be a barrier to access higher education, because they would not take out loans in order to afford college.)

The economic repercussions of mounting student loan debt can be felt throughout society as it has resulted in Americans unable to buy homes, cars, or save for retirement or their own children's education. MSNBC guest host Blake Zeff explains his situation below:

In terms of student loan debt relief, Sen. Elizabeth Warren (D-Mass.) and Rep. Joe Courtney (D-Ct.) introduced the Bank on Students Emergency Loan Refinancing Act of 2015 in their respective chambers last week. The bill, which was also proposed last year, would allow student borrowers -- with both private and federal student loans -- to refinance at current, lower interest rates. The bill would provide relief for an estimated 25 million student loan debt holders by lowering their monthly payments.

What can be done to stop cuts to the Pell program?

"I'm quite frankly worried," Wang admitted. "I'm always worried about the Pell Grant because until those funds are mandatory and not discretionary, we're going to have Pell shortfall and there are going to be some people who don't think the Pell Grant is worth the investment."

As education costs soar and as student loan debt plagues 40 million across the country, cuts to Pell Grants, barriers to accessing Pell Grants, and cuts to school interest subsidies would only make affording higher education more difficult and add another economic burden to millennials and the U.S. economy.

"[Pell Grants] are common sense grants for higher education, and the fact that they're being threatened, the fact that there are legislators in Congress who are wanting to balance the budget on the backs of students and families is pretty disturbing," Wang stated. "I think that these are issues that have to be humanized...this could lead to young adults not enrolling or dropping out or delaying their education, or taking a break from education, which could be a completion issue because a lot of people take a break and never come back."

Despite her worries about Pell Grants, Wang is confident that there is some consensus in Congress around other higher education reforms, including simplifying financial aid and the FAFSA process. "I wouldn't say that there are any barriers to helping students and their families pay for college and attend college, but there is disagreement over these big issues," Wang conceded.

In terms of students making their voices known on these important higher education issues, Wang says that the most important thing is to become aware of what is going on at both the federal level and especially the state level because states are often cutting higher education funding. She says paying attention to the budget and policy process is critical (and suggests Student Impact Project as a good resource).

"And we hope that our lawmakers are paying attention," she concluded. "Because, of course, Pell Grants, student loans -- these are pocketbook issues for young people today given how much debt there is."