Congress reached a deal on the fiscal year (FY) 2012 budget, which includes the nine remaining appropriations bills needed to fund the federal government for the rest of FY 2012. The bill includes award year 2012-13 funding levels for the federal student aid programs and maintains a $5,550 maximum Pell Grant for the 2012-13 award year by cutting spending on other student aid programs and restricting eligibility.
Negotiators had worked on the agreement for the Labor, Health, Human Services and Education (Labor-H) appropriations subcommittee bill for several months. The final bill reflects a bipartisan compromise between the draft House and Senate bills, which both maintained the $5,550 Pell Grant for award year 2012-13, but varied greatly in how they plug the current $1.3 billion shortfall the Pell Grant program faces.
The compromise bill includes a provision to temporarily eliminate the interest subsidy on undergraduate subsidized Stafford loans during the six-month grace period—a variation of the original Senate provision to eliminate it entirely. The bill also includes some of the eligibility changes found in the original House bill.
Key provisions can be divided into three categories: those affecting Pell Grant only; those affecting all Title IV programs and; provisions affecting Direct Loans only:
Together, elimination of the temporary Stafford loan interest subsidy during the grace period and eligibility changes are expected to save $11 billion over 10 years—enough to immediately plug the award year 2012-13 Pell Grant shortfall.
Several items that were included in the original House bill did not make their way into the final bill, including revoking Pell eligibility for students who attend less-than-half-time; reducing student income protection allowances (IPA); and the reinstating of previously excluded forms of untaxed income to the EFC calculation. In addition, the original House bill would have also prohibit expenditure of any funds by ED to implement, administer, or enforce the program integrity regulations relating to gainful employment, state authorization, or credit hour definition, nor may funds be used to develop new regulations pertaining to the definition of gainful employment or the application of that term.
All other student aid programs (excluding Pell) will be impacted by an across-the-board cut. NASFAA will share those final numbers once they are made available.
Publication Date: 12/16/2011