Special Bulletin: Proposed Federal Budget Would Reportedly Makes Big Cuts in Programs for College Students and Graduates

The Washington Post reports it has received what a U.S. Education Department staff member described as “near final” documents showing the administration will IMG_6510recommend a 13.6% reduction in federal education spending next week. The budget proposal would reportedly affect federal financial assistance for college students as follows:

  • Child Care for Enrolled Parents: End a $15 million program helping to make child care affordable for low-income parents attending college.
  • Federal Direct Subsidized Loans: Make as yet unannounced cuts that could end this program, which currently serves financially needy students. If this happens, all federal loans for such students would be unsubsidized and begin compiling interest the day they are made — significantly increasing student borrowing costs.
  • Federal Pell Grants: Hold Pell Grants for the nation’s neediest undergraduates at their current levels ($606 to $5,920 for fall and spring combined). Due to inflation, this would decrease Pell’s future “purchasing power.” Some good news is that the budget would fund an extension of 2017’s summer Pell Grants in future years.
  • Federal Work-Study (FWS): Cut FWS funding by $490 million (almost half), significantly reducing federally subsidized on and off-campus jobs that financially needy students use to pay for college.
  • Income-Driven Repayment: Close down all current income-driven repayment plans available to federal college loan borrowers. These plans offer loan forgiveness for balances remaining after borrowers pay 10% to 20% of their incomes over 20 to 25 year periods. They would be replaced with a new income-driven option requiring payments equal to 12.5% of income and limiting loan forgiveness to balances still outstanding after 30 years of such payments.
  • Public Service Loan Forgiveness (PSLF): Eliminate PSLF, which offers tax-free debt cancellation on federal student loan balances owed by ex-students in public service jobs after 10 years of on-time payment. Over 550,000 federal, state, local, and nonprofit employees are already registered for PSLF. It’s not yet clear whether they or public servants not yet registered would be cut off from It.IMG_6511

Presidents propose federal budgets, but Congress ultimately decides them. So if you support or oppose any of these proposed cuts, call or write your U.S. representative and senators to tell them how you feel.

College Affordability Solutions will post more bulletins on this website as additional information becomes available.

During College: Pell Grants Can Help Pay for Summer School 2017

Got an undergraduate who could benefit from summer school? Did she receive a Federal Pell Grant in the fall/spring? If so, here’s good news — Pell Grants will be available this summer!

Undergraduates who earn bachelor’s degrees in 4 years or less borrow 35% less in student loans, so this presents an opportunity for your student to speed her time to degree and reduce her college debt.

A new law funding the government through September includes an exception toIMG_6269 rules prohibiting Pell Grants for most summer students. So summer Pell recipients may get up to the same amount they received for a single semester or quarter earlier this academic year.

Summer Pell Grants rules are due by July 1, so we’ll have to wait for the actual terms and conditions of these grants. Also, Pell funds may not be available until early July, so your student should contact the financial aid office to explore short-term options (emergency loans, payment plans, etc.) for covering summer expenses until then.

Other things to remember about Pell and summer school . . .

Enrollment Status: To receive federal student aid for which she’s eligible, including Pell, your student must be a regular student in an eligible program of study. So she probably needs to take summer classes at the institution where she’s pursuing her degree, not at a community college as a “transient” student.

Grant Amount: Pell amounts are based on enrollment status — i.e. undergraduates enrolled full-time (generally 12 or more hours) get 100% of what they qualify for; students enrolled three-quarter time get 75%; half-timers get 50%; and those enrolled less-than-half-time get 25%.

IMG_6270Summer Costs and Other Summer Aid: Make sure your student avoids the trap of enrolling in summer courses but lacking sufficient funds to finish them despite her Pell Grant. The aid office’s website displays summer costs. Check out whether your student can get federal loans or other aid for summer — many Pell recipients use up their annual loan eligibility during fall/spring and some schools award all their work-study and state/institutional aid during fall/spring. Have your student call the aid office to see what’s available for summer.

This Summer Only: Summer Pell is currently available for 2017 only. Whether it’s there for future summers depends on what Congress does.

Affordable summer enrollment where she’s getting her degree may benefit your student more than summer employment or community college summer school. Check it out!

For strategies on getting the most out of the financial resources available to your student, contact College Affordability Solutions at collegeafford@gmail.com or (512) 366-5354.