President Obama’s new budget proposes some $10 billion a year in Pell Grant cuts, but looks to achieve that goal without reducing the maximum grant or dropping any students from the program. They’re doing that by seeking Pell savings in two areas — summer grants and graduate loan interest.
Summer Pell Grants are a recent addition to the Pell program, under which students can apply for a second grant for summer school if their total courseload adds up to more than a full academic year’s worth. The summer Pells are new, as I said, and they’ve been popular — so popular that they’re costing quite a bit more than anticipated. Obama is proposing eliminating them.
The second cut is to graduate loan interest subsidies. Right now, while you’re in grad school, your federal student loans don’t accrue interest — they just sit there, at the amount you borrowed them, waiting for you to be done. Under Obama’s budget plan, that would end, and though you still wouldn’t be paying back the loans while you’re in school, the amount you borrowed would be growing due to interest accrued during your studies.
The administration says that by making these two changes, they can keep eligibility for the larger Pell program steady while maintaining the recent hike to the maximum grant while cutting as much as $100 billion from the program’s cost over the next ten years.