For the first time in history, student debt has reached over $1 trillion. In 2012, the average debt for a college graduate amounted to a whopping $25,000. Annually, tuition increases by about 8% for public universities. These increases in the cost of attending college, combined with a struggling economy bound with slowing job growth, create a bleak economic future for many college students and recent graduates who are overwhelmed by student loan debt.
Washington has given ample attention to the college debt crisis. However, as policymakers continues to debate legislation that would prevent student loan interest rates from doubling in July, low-income students are already taking some of the hardest hits in the face of billions of dollars of Pell grant cuts.
Pell grants are awards specifically targeted for low-income students. Those who meet the income criteria are eligible for the grant, which gives up to $5,550 per student per year. Currently, 9 million students receive financial aid from Pell grants. However, last month, Secretary of Education Arne Duncan predicted that the Pell Grant program could face a $20 billion funding shortfall.
Additionally, House Budget Committee Chair Rep. Paul Ryan’s budget calls for over 1 million students to lose Pell grant aid within the next 10 years. The proposed plan would reduce Pell grants by $170 billion by creating strict eligibility criteria and making Pell grant spending optional, instead of compulsory.
Policymakers seem to be neglecting these reductions in Pell Grant funding, which make college plausible for many low-income students, and instead are narrowly focusing on student loan interest rate legislation. Moreover, decreasing student debt has taken a backseat to financial threats from programs suffering severe instability such as Medicare and Social Security.
Although the Administration has expressed a need to secure aid for low-income students through Pell grants, the emphasis still lies on preserving low interest rates for student loans. While middle- and low- income families often depend on federal student loans, the combination of reductions in Pell grant funding will cripple the financial options for college-bound low-income students.
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