Federal Relations

March 26, 2012

Ryan Budget Proposes Deeper Cuts to Student Financial Aid

Last week, Rep. Paul Ryan (WI), unveiled his FY2013 budget resolution calling for an overhaul to the tax code and deeper reductions in spending. Among Ryan’s proposals was limiting the growth of federal financial aid for college students, focusing it on low-income students. More specifically, Rep. Ryan proposes a budget that:

  • Eliminates the in-school interest subsidies for undergraduate students
  • Eliminates the student aid eligibility expansions enacted by the College Cost Reduction and Access Act (CCRAA), including auto-zero eligibility and Income Protection Allowance
  • Proposes an undefined a maximum income cap for Pell Grant eligibility
  • Eliminates Pell Grant eligibility for less-than-half-time students
  • Eliminates the automatic increases in the maximum Pell award above $5,550
  • Eliminates the mandatory funding for Pell Grants
  • Eliminates Pell and Campus-Based Aid Administration Cost Allowances (ACA)
  • Repeals the mandatory funding for College Access Challenge Grants ($150 million in FY 2013). Again, since there is no corresponding increase in the discretionary side, in effect this either cuts this program or will result in $150 million in additional cuts in FY 2013 to all other discretionary education programs.
  • Allows interest rates on subsidized Stafford loans to double on July 1 from 3.4% to 6.8%

While this budget resolution is not expected to be adopted in full in the House or the Senate, some of these proposals may be used to shape the debate over the budget and deficit reduction in the coming months and will be a topic that we will be keeping a close eye on.