Community Corner
Budget Control Act of 2011 Directly Addresses Student Loans
Additional $17 billion provided for Pell Grant program a welcome relief for students across the borough who are paying for their education
The Budget Control Act of 2011 put into place by President Obama yesterday has resulted in cuts for a number of government programs, but Brooklyn students paying for their education can rejoice in the fact that student aid programs were provided with additional monetary funding.
The Pell Grant program faced a $20 billion reduction for the fiscal year of 2012 when Obama first released his budget last February, but the new debt ceiling law has provided an additional $17 billion for this program while also ending interest subsidies on graduate student loans.
In a summary released by the National Association of Student Financial Aid Administrators (NASFAA), the organization highlights the three main areas of the Budget Control Act of 2011 that directly impact student funding: Pell grants, interest subsidy for graduate students and direct loan repayment incentives.
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The Pell Grant program was provided with additional $10 billion in mandatory funding for the fiscal year of 2012 and an additional $7 billion for the fiscal year of 2013. However, this program will still face a $1.3 billion deficit for the 2012 fiscal year.
Starting on July 1, 2012, in-school interest subsidies for graduate and professional students will also be eliminated. This will ultimately save $18.1 billion over the course of the fiscal years between 2012-2021, just under half of which will come during the first half of this period. However, this subsidy elimination does not apply to students in programs who are receiving teaching certifications that are awarded by the state instead of a specific institution.
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Direct loan repayment incentives were also eliminated, which will provide $3.6 billion in savings over the course of the fiscal years from 2012-2021. The Department of Education will also be barred from authorizing or providing repayment incentives on new loans that were disbursed on or after July 1, 2012.
For college students in Brooklyn, the news about the additional funding was met with overwhelming approval.
“It didn’t occur to me that the government would even consider financial aid for students when addressing the debt crisis, so it’s definitely something I’m very happy about,” said Katherine So, a rising sophomore at SUNY-Binghamton who is home in Fort Greene for the summer.
