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.