U.S. PIRG report details state-by-state impact of transferring Pell Grant subsidies from banks to students
Washington – Today, U.S. PIRG released a new report, “Obama’s Budget: Supporting Students not Banks.” President Obama’s budget proposal makes a significant reinvestment in the Pell Grant program by cutting excessive lender subsidies from the student loan programs and redirecting that money to student aid.
“Getting a college degree is practically a necessity. But states are cutting public college budgets and grant aid has been stagnant for too long. As a result, students face skyrocketing loan debt upon graduation,” said Rich Williams, U.S. PIRG Higher Education Associate. “The president’s plan changes the priorities within the student aid programs, putting struggling students and families first.”
The key piece of President Obama’s higher education plan includes increasing the Pell grant maximum from $5,350 to $5,550. It also makes the Pell grant more reliable, by ensuring that the maximum would increase each year to keep pace with inflation. Finally, more students would become eligible to receive Pell grant aid under the plan.
To pay for these changes, the president’s proposal cuts excessive bank and lender subsidies from within the student loan programs. The non-partisan Congressional Budget Office estimates that this cut will result in a savings of $47 billion dollars over 5 years, with $5 billion being redirected toward students in the first year alone.
The report calculates the benefit if the full $5 billion went to students in each state. The average Pell Grant award would rise by approximately $121 next year, from $2,236 to $3,357. Approximately 260,000 additional new students across the country would receive their first Pell Grant and be able to attend college.
The report comes on the heels of the introduction of budget resolutions in both chambers of Congress that also propose a significant reinvestment in the Pell grant. “I look forward to working with both the House and Senate as Congress joins the President in making sure every student has access to an affordable education,” Williams stated. While both resolutions echo President Obama’s plan to make college affordable, the House resolution also maps out a clear path to victory.
Williams added, “This is a plan for students and families. In today’s economy, students need to know that the public is behind their choice to get in to college and stay there. The president’s proposal puts students’ needs ahead of banks and lenders.”
Read the report here.
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