With political tensions and nerves running high among members of Congress over the United States potentially defaulting on its debt, President Barack Obama signed a bill earlier this month to lift the $14.3 trillion debt ceiling and put worries at ease for the immediate future.

But flying under the radar as part of the bill was a measure to preserve the maximum Pell Grant of $5,550 for more than nine million undergraduate students across the country. The preserved Pell Grant Program, aimed at low- and middle-income undergraduates, happened because the bill eliminated a federal subsidy for graduate students.

For graduate students who receive federally subsidized loans, the trade-off means that interest on the subsidized loans will begin to accrue while they’re still in school, instead of accruing after graduation, beginning July 1.

The U.S. House of Representatives approved the compromise debt-ceiling bill Aug. 1, and the Senate approved it the next day. Obama signed the bill on the same day as the Senate and sent a formal request to Congress to lift the $14.3 trillion debt ceiling, immediately giving the U.S. Treasury $400 billion in additional borrowing power.

Nearly a month later, a financial aid official at Syracuse University sees the trade-off that saved the Pell Grant Program’s maximum award as worth the elimination of the federal subsidy.

‘We knew that there would have to be some sacrifice, but given the difficulties and financial challenges in America, we were pleased that we were able to protect the majority of our students, including our middle-income students who depend heavily on financial aid, as well,’ said Youlonda Copeland-Morgan, associate vice president for enrollment management and director of scholarships and student aid at SU.

Of the 14,201 undergraduates at SU for the 2010-11 school year, 3,962 — or nearly 28 percent of students — received Pell Grants. The total amount of Pell Grants offered to those students was more than $16.2 million, Copeland-Morgan said. The number of Pell Grant-eligible students is still growing, she said.

‘Historically, Pell Grants have focused on providing college access from low-income backgrounds,’ she said. ‘But what we’re seeing is a shift in the profile of the students who are qualifying for Pell Grants — that is that many of our students from middle-income backgrounds are now qualifying for Pell Grants because their parents have been downsized and their incomes have changed or they’ve lost their home.’

Despite the elimination of the federal subsidy for graduate students, Copeland-Morgan said SU is not likely to offer additional aid to them, as doctorate students, for example, are often funded by the university.

Though Copeland-Morgan is awaiting more information from the U.S. Department of Education on how the elimination of the federal subsidy will be implemented, she said she believes the new measure will apply to loans processed after July 1. If that’s the case, her staff will work with graduate students to do earlier financial aid planning in 2012, so they can get their loans processed before the July 1 deadline, which could give students a fully subsidized loan for another school year, Copeland-Morgan said.

In February, the House passed a bill, called H.R. 1, which would have cut $60 billion from the 2011 fiscal year federal budget, including $5.7 billion from the Pell Grant Program. The proposed cuts would have lowered the maximum Pell Grant from $5,550 to $4,705. The changes would have reduced SU’s Pell Grant by about $2.6 million.

If the federal government would have moved forward with the cuts, the university would have funded the difference for Pell Grant recipients in 2011-12, Copeland-Morgan said in April.

If the cuts had been made, 1.7 million students nationwide would have no longer been eligible for the program, and an additional 7.5 million students would have had their grants reduced, according to an email sent out to SU students Feb. 24 by the Office of Financial Aid and Scholarship Programs.

Copeland-Morgan said SU worked with elected officials — both in New York and outside the state — to help find ways to protect the Pell Grant Program.

‘The fact is that the cost of the Pell Grant Program has increased significantly over the past couple of years because in these times more individuals, both traditional-age students and nontraditional students, choose to go to school to be retrained, so they don’t have the financial assistance that they need in order to go to school,’ she said.

Sara Gast, a public affairs specialist for the Education Department, said preserving the maximum Pell Grant was a priority for both the secretary of education and President Obama. Pell Grants are one of the larger college issues the Education Department deals with, as it helps give many students the opportunity to attend college, she said.

Said Gast: ‘We’re very happy with what Congress decided to do, and we’ll do our best to protect Pell Grants down the road.’

jdharr04@syr.edu  

Published on August 29, 2011 at 12:00 pm

Contact Jon: jdharr04@syr.edu