Incoming Budget And Education Committee Chairmen May Be Eyeing Student Loan Cuts

The House Republicans’ much-ballyhooed Pledge to America includes a commitment to reduce non-defense discretionary spending to the level at which it was in 2008. This would mean — among many other things — that funding for Pell Grants would be reduced by $9 billion, even though demand is likely to go up as the effects of the Great Recession linger.

The Pledge’s architect, Rep. Kevin McCarthy (R-CA) bristled when Bloomberg News’ Al Hunt made this point during an interview last week. “Are you willing to cut Pell Grants for middle-class college students by $4 million or $5 million [in 2011]?” Hunt asked. “Well, see, people go out and pick the special little places,” McCarthy replied.

McCarthy may be playing it coy, but according to Inside Higher Ed, incoming House Budget Committee Chairman Paul Ryan (R-WI) and potential House Education and Labor Committee Chairman John Kline (R-MN) both have their eye on Pell reductions:

“Under a Republican Congress, Pell will certainly be revisited and reconsidered in a substantial way,” said Moran, of AASCU. Whether that means raising eligibility standards, cutting the maximum award level or drastically reshaping the Pell program remains to be seen. A senior Republican Senate staffer echoed that view. When it comes to finding ways to cut federal student aid spending, said the Republican Senate staffer, “if John Kline doesn’t fire the first volley, Paul Ryan in the budget committee is going to.”

The Pell Grant program is already facing a shortfall that will result in 9 million students seeing their grants cut if Congress doesn’t work to address it. Further cuts would be make this problem even worse.


Cuts in Pell Grants would also start to undo one of the least publicized achievements of the 111th Congress: increasing the amount of money available for the Pell program by cutting out billions in senseless subsidies that were given to private bankers to originate federal loans. As a result of that move, $100 billion will be pumped into the economy due to the increased earnings of low-income students who now have access to higher education.

The U.S. is already on pace to be short millions of college-educated workers in the next few decades, as our educational attainment has stagnated. The U.S. has fallen to 12th in percentage of 25–34 year olds with a college degree. Canada is currently number one in terms of attainment, and “the U.S. would have to add 1 million college degrees per year through 2025, on top of the 2 million degrees already awarded annually” to catch up.

“The growing education deficit is no less a threat to our nation’s long-term well-being than the current fiscal crisis,” said Gaston Caperton, the president of the College Board. But the GOP seems ready to take a hatchet to student loans, in the name of fiscal responsibility.