September 25, 2011
By Judith Huntington, President of The College of New Rochelle
In another stark reminder of the toll the nation's depressed economy is taking on today's college graduates, the U.S. Department of Education recently reported that nearly 1 of every 10 recipients of student loans defaulted on their payments last year, the highest rate in more than a decade. Another recent study by the Institute for Higher Education Policy revealed that for every borrower who defaults, at least two more fall behind in payments.
This disturbing trend points to the growing importance of the federal Pell Grant program and our nation's ability to provide financial aid to those who otherwise wouldn't be able to afford a college education.
Established in 1972 and named after Rhode Island Sen. Claiborne Pell, the Federal Pell Grant program helps students from low- and low-middle income families whose income levels are less than $50,000 pay for college costs. Unlike a loan, a Pell Grant does not have to be repaid. The current cost of the program is $38 billion annually or 1 percent of the federal budget, which makes it a likely target for future budget cuts.
The passage by Congress of the compromise bill raising the nation's debt ceiling avoided an immediate 40 percent cut in discretionary spending including federal student aid programs.
The compromise bill includes $17 billion in supplemental funding for the Pell Grant program for academic years 2012-13 and 2013-14. The 2011-12 academic year is already funded. Based on this supplemental funding, the maximum Pell award will most likely remain at $5,500.
While funding for the Pell program appears to be secured for the next two years, it remains vulnerable for future reductions. For example, the "summer Pell" grant, which allowed students to pay for summer classes, has been eliminated. Other programs that have already seen reductions in funding include the Federal Supplemental Educational Opportunity Grant (SEOG) Program, the College Work Study program; the New York State Tuition Assistance Program (TAP) and Bundy aid, which provides direct unrestricted financial support to certain independent postsecondary institutions located in New York state.
For The College of New Rochelle, the elimination of the summer Pell program means a loss of approximately $1.8 million awarded annually to our School of New Resources students. As a result, these students will have to borrow more.
Each year, The College of New Rochelle awards $18.3 million of Pell grants to students primarily in the School of New Resources, School of Arts and Sciences and the School of Nursing. In total, 85 percent of our students receive some level of Pell funding on an annual basis. Therefore, any future reduction of Pell funding is likely to have a meaningful impact on the ability of some of our students to enroll and remain in college.
While the Pell funding remains secure for now, the budget bill passed last month did eliminate the in-school interest exemption for graduate and professional students. Under this provision, the federal government paid the interest while the graduate student was enrolled in school. The elimination of this interest subsidy will add approximately $1,676 for each $8,500 borrowed.
The College of New Rochelle, like many small private colleges and universities, is a tuition dependent institution and a great majority of our students rely heavily on both federal and state aid. While a dependence on tuition and financial aid present a certain level of risk, we assume those risks in the fulfillment of our mission.
The Pell Grant Program has been a cornerstone of financial aid for higher education for nearly four decades. As our nation grapples with a weakened economy and a ballooning federal deficit, preserving funding for the Pell Grant program, as well as other federal and state student financial aid programs, takes on even greater urgency.
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