cafc presentation 9 29-11 ticas
TRANSCRIPT
Federal Aid Programs:
What they Mean and Where they Stand
College Access Foundation Convening Los Angeles September 28-29, 2011
Debbie Cochrane [email protected]
www.ticas.org
Federal Grants and Loans • Pell Grants and federal loans are the two largest
sources of undergraduate financial aid
• Both are widely available to students with minimal academic requirements and few college or program restrictions
• The federal Pell Grant is the foundation of students’ financial aid packages
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Aid amounts from College Board, Trends in Student Aid 2010
Support the Federal Pell Grant • More than 9 million Americans – and one million
Californians – depend on Pell Grants to go to and complete college. – Most Pell recipients have family incomes of $40,000 or
less. – Nearly half of African-American undergraduates and 40%
of Latino undergraduates rely on Pell Grants to attend college.
• The maximum Pell Grant is currently $5,550, though students’ grant size depends on their need and attendance status.
The Federal Pell Grant
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U.S. Department of Education, “Fiscal Year 2012 Budget Request: Student Financial Assistance,” p-13, projection of Pell Grant recipients 2011. Calculations by TICAS on data from the U.S. Department of Education, Office of Postsecondary Education, “Pell End-of-Year-Report,” 2009-10, Table 71.
Declining Purchasing Power The maximum Pell Grant currently covers about one-third of the cost of attending a public 4-year college (tuition plus room and board) – a smaller share than in the 1980s.
Calculations by TICAS using the College Board, Trends in College Pricing 2010, Table 5a and FinAid.org, Pell Historical Figures. 4
Support the Federal Pell Grant • Some have proposed cuts to Pell Grant awards
and eligibility. However: – The program is not “unsustainable” – annual growth
estimates are 1-2% over next ten years.
– 40% of recent Pell Grant growth was due to the economic downturn, not to policy changes.
– When America’s economy needs more students to complete college - and more are struggling financially to do so - we should be investing in those students, not cutting the financial aid programs that make it possible for them to work their way into the middle class.
Protect the Federal Pell Grant
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TICAS. 2011. Cutting Pell Grants Will Hurt Families and the Economy, Lower College Completion. http://projectonstudentdebt.org/files/pub/Overall_Pell_one-pager_TICAS_06-29-11.pdf.
Support the Federal Pell Grant
• Summer Pell/Two Pells in an Award Year Pell
• Loan subsidy for graduate students Pell
• Student loan repayment incentives deficit
• (Proposed) Grace period loan subsidy for undergraduate students Pell
Related Student Aid Cuts
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Support the Federal Pell Grant Harmful cuts to Pell Grants could take many forms:
• Reducing the size of the maximum grant • Reducing the size of the minimum grant • Redefining full-time attendance at 15 credits • Rolling back recent eligibility changes • Instituting an income cap • Changing the types of income considered in needs analysis • Excluding less-than-half-time students • Excluding students without a high school diploma or GED • Instituting an age cap • Reducing lifetime limits on Pell receipt
Proposals to Cut Pell Grants
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Support the Federal Pell Grant • Coalition of civil rights, social justice, education, and
youth organizations dedicated to protecting college opportunity for low-income and working-class students
• Key message: No cuts to the maximum grant or harmful cuts to eligibility
• www.savepell.org
Save Pell Coalition
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Two separate processes underway:
• FY 2012 Budget negotiations: – Not out of the dark yet – Still small but significant funding gaps ($1.3 billion for FY
2012, $1.6 billion for FY 2013) – Senate wants to cover the gap, but House has proposed
wide-ranging cuts
• The Super Committee • Tasked with finding >$1 trillion in cuts to reduce the deficit • If no agreement, trigger cuts (“sequestration”) of $1.2 trillion
(2012-13 Pell Grants would be exempt) • Everything is on the table
What’s Next for Pell Grants?
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• Federal student loans are safer and more affordable than other forms of borrowing. – Income-based repayment (IBR) caps students’ monthly
loan payments to a percentage of their discretionary income.
– Forgives remaining loan balances after 25 years (or 10 years if student works in public service)
– See www.ibrinfo.org for more information.
• Colleges can do more to help students avoid private loans.
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Federal Loans First
• California compares favorably to most other states. – 48% of California’s Class of 2009 graduated with an
average of $17,326 in student loan debt (43rd and 44th in the nation, respectively).
• Important factors that help keep debt down in California: – Generous Cal Grants program for four-year students. – Heavy reliance on community colleges, in which very few
students borrow (and some are prohibited from doing so).
For state-by-state data on student debt and methodology, see http://projectonstudentdebt.org/state_by_state-data.php.
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Student Debt in California
