House Republicans propose changes to Pell Grants, student loans

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Republicans in the U.S. House of Representatives released a 2013 budget proposal Tuesday which included suggested changes to federal Pell Grants and student loan accounting.

The budget proposal, which was authored by Chairman of the House Budget Committee Paul Ryan, proposes changes that would limit the growth of federal financial aid, stating that current government lending practices contribute to tuition inflation.

However, the federal government has already made recent cuts to federal financial aid. In December, President Barack Obama signed a legislative compromise that tightened eligibility requirements for Pell Grant recipients, cutting Pell Grants for an estimated 100,000 students nationwide.

According to the proposal — which does not yet include numeric projections of how the changes would impact students — Republicans plan to return Pell Grants to a “sustainable funding path” so that aid is available “for the truly needy.”

The proposal states that increases in Pell Grants appear to directly match increases in tuition at private universities, and that limiting Pell Grants could effectively curb tuition inflation for all students.

Republicans believe the changes would force colleges to change how they distribute financial aid.

But UC spokesperson Dianne Klein said the changes, if implemented, could put a strain on the university’s financial aid funds.

“Changes in Pell Grants would certainly affect a large number of UC students and just make it tougher for everyone all the way around,” she said. “Any time there’s reduction in grants or funds coming in to the university we have to make up for it somehow.  Every drop erodes that base further — the money has to come from somewhere.”

Klein said about 40 percent of UC students receive Pell Grants. UCLA, UC Berkeley, UC Davis and UC San Diego each enrolled more Pell Grant recipients in the 2008-2009 academic year than all of the Ivy League institutions combined, according to the UC website.

Klein added that while students under the UC Blue and Gold Opportunity Plan — which allows California residents from families who make under $80,000 a year to receive full financial aid — would still be guaranteed aid if the changes go into effect, work study requirements could potentially change.

The proposal also notes that student loans currently appear as profit-making investments in the government’s accounting system and encourage further loaning and tuition inflation. With the proposed budget changes, loans would reflect their true market risk and cost, according to the proposal.

Rep. Barbara Lee, D-Oakland, said in a Tuesday press release that the proposed budget would hurt the country’s most vulnerable communities.

“This Republican proposal is an attack on low- and middle-income people,” she said in the release. “It also slashes critical investments, such as education.”

Damian Ortellado is the lead higher education reporter.

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  • 1776

    The United States doesn’t have any more money. Maybe if these  Pell Grants didnt exist universities wouldn’t be able to raise their prices (knowing the United States Government would pay w/e they want) and thus forcing perspective students out of the education market. Sometimes, just  sometimes, the solution to a problem is liberty

    • rich country low taxes

      The people in the US have a lot of money, it is just concentrated at the top 1%. If people paid more taxes then we could afford Pell Grants. 

      • libsrclowns

        Robin hood sings the redistribution song….yawn.

      • Stan De San Diego

        “The people in the US have a lot of money, it is just concentrated at the top 1%.”

        That will teach you not to major in Ethnic Studies in your next life. Learn something useful and you might not have to whine about what other people have.

      • libsrclowns

        There goes the Buffett rule.

        Remember that political gambit, in which billionaire Warren Buffett pretended he was going to pay a much higher tax bill and President Obama pretended that raising rates on millionaires would make a dent in his hemorrhaging budget deficits?
        In one fell swoop Wednesday, Congress’s tax scorekeeper punctured both phony claims. The analysis from the Joint Committee on Taxation also showed less wealthy taxpayers why the Buffett ruse would eventually end up exposing them to higher taxes.

        With Mr. Buffett’s help, Mr. Obama promoted the fairy tale that millionaires pay lower tax rates than their middle-class employees (despite government data showing the opposite). The President then proposed to require all those making more than $1 million in adjusted gross income to pay a minimum of 30% in federal income taxes.

        Senator Sheldon Whitehouse (D., R.I.) quickly drafted legislation to turn this re-election posturing into law. Joint Tax dutifully studied the bill and has delivered the official score: This year, the Buffett rule would increase federal revenues by all of $1.1 billion.

        That’s less than one-tenth of one percent of the $1.2 trillion budget deficit Mr. Obama is scheduled to run this year. Through 2022 Joint Tax expects less than $47 billion in total new revenues from the Buffett rule while the government will be adding trillions of dollars to the national debt. Joint Tax even concedes, as it is rarely wont to do, that the rule will affect taxpayer behavior: By raising the effective tax rate on capital gains, the rule will encourage people to realize fewer capital gains

        Apply the same logic to Cali. Calling all Robin Hoods…..LOL