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Federal Pell Grants Protected Under Debt Ceiling Agreement




Contact: Sandy Connolly, Director of Communications
Office of Higher Education
(651) 259-3902

St. Paul, MN  Minnesota students who depend on Federal Pell Grants to help pay the cost of their college tuition will be relieved to learn that the debt ceiling deal announced by the White House and Congressional leaders this week-end does not cut spending on the federal student loan program.

According to Dr. Sheila Wright, Director of the Minnesota Office of Higher Education, the agreement includes enough new funding to maintain the maximum Pell Grant at its current level, despite increases in student enrollment.

"Close to 200,000 students in Minnesota receive Pell grants each year," said Dr. Wright. "I am delighted and appreciative that our national leaders recognize the value of investing in education and ensuring access and opportunity for students from low and middle-income to pursue continued education at the postsecondary level. Combined with Minnesota's State Grant Program, federal funding is the central vehicle for ensuring the promise of higher education for all Minnesotans."

The agreement, which must still be adopted by Congress, adds $10 billion for Federal Pell Grants for FY 2011 (aid year 2011-2012) and $7 billion for federal FY 2012. This additional spending authority is expected to be enough to maintain the maximum Pell Grant per student at the current level of $5,550 per year.

In 2010-2011, 181,600 Minnesota students received $606 million in Federal Pell Grants and the average yearly award was $3,300.

One significant change included in the bill is the termination of subsidized federal Stafford Loans for graduate students as of July 1, 2012.

Federal Stafford Loans, also known as Direct Loans, are the largest type of federal student loans. Students with need may take out Subsidized Stafford Loans, in which the federal government pays the interest on the loan while the student is enrolled in postsecondary education.

"Some students could owe as much as $5,000 more in federal loans by graduation under the proposal, said Pauline Abernathy, vice president of the Institute for College Access and Success." (Inside Higher Ed, July 18, 2011)

The bill would also eliminate some repayment incentives for federal student loans, which provided a rebate of 1 percent if monthly loan payments were made on time.

"Overall, I'm pleased with the final agreement with regard to its impact on our nations' college students," said Dr. Wright. "For the economic viability of our students, our communities, and our businesses, access to higher education must be maintained and strengthened going forward."

View the bill online.

There is also a White House Fact Sheet on the agreement.

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