The Budget Control Act of 2011, an Aug. 1 agreement allowing the federal government to raise its national debt ceiling and, subsequently, trim its deficit, presented U.S. lawmakers with many difficult decisions.
Among considerations for cuts prior to Congress’ passage and President Barack Obama’s signature was funding for Pell Grants, which provide eligible undergraduate students up to $5,550 in financial aid. But, when the act passed, Pell Grants were preserved with $17 billion in funding for fiscal years 2012 and 2013. Graduate and professional students, however, did not fare as well. The act calls for the elimination of in-school loan interest subsidy and eliminates direct loan repayment incentives, according to the National Association of Student Financial Aid Administrators.
To get a better sense of the Budget Control Act of 2011 and other matters regarding USD student financial aid, Inside USD’s Ryan T. Blystone asked Office of Financial Aid Director Judy Lewis Logue, who has worked on financial aid matters for public and private colleges, including the last 22 years at USD, some questions. Her answers follow:
What statistical information can you provide about USD’s student financial aid numbers?
Approximately $3.6 million in Pell Grant aid went to 1,002 eligible USD students in the 2010-11 academic year. That’s up from 757 recipients in 2009-10. In 2010-11, 70 percent of USD undergraduate students received some form of financial assistance totaling $121.94 million, which includes more than $24.40 million in Federal PLUS loans received by parents. For the same year, 79 percent of graduate students received some form of financial assistance totaling $32.12 million. Paralegal students received more than $1.7 million in loans in 2010-11. For more information, check out the Fall 2011 USD Office of Financial Aid newsletter.
Pell Grant funding, before the Aug. 1 agreement, was considered a targeted cut. What’s the status of that funding now?
At this time, we’re business as usual. The federal package provides $17 billion in mandatory funds for fiscal years 2012 and 2013. What we’ve been told is the joint congressional committee tasked with legislating deficit reduction will take another look and make a decision as to how to cut an additional $1.5 trillion from the federal budget by December 23. We’re not out of the woods yet, but it’s a better-than-expected position going into the woods. It also appears that any decisions made by December 23 would not go into effect until July 1, 2012, so students who are graduating next May won’t be affected.
Graduate and professional students will be most affected by the act’s passage. Can you explain what changes face these students?
Graduate students whose loans have been subsidized will now have to pay interest while they’re in school, rather than being subsidized by the government when they’re in school and during the six-month grace period after they leave. If you’re in the first year of a master’s program and will be in your second year next year, you’ll have different circumstances. Savings from eliminating the graduate loan subsidy are being put into Pell Grant funding for undergraduates.
What has USD done in the wake of this decision to help affected students?
I want to start by saying that USD’s Board of Trustees, President Mary Lyons and Provost Julie Sullivan have all been very supportive in making funds available to the Office of Financial Aid (OFA) to assist students. I think they deserve a lot of credit for making it a priority during this continuing recession. Since the signing of the Budget Control Act the OFA has been getting some calls and questions asking how this affects their financial aid eligibility. The OFA will assist affected students in any way it can. We will be providing information to graduate students who plan to enroll after July 1, 2012 and will need to borrow a Stafford Loan. We would make it clear to them that they would be required to pay the interest on the Stafford loan while they are enrolled and during the six-month grace period. For instance, for an $8,500 loan that would be approximately $867 more in interest a student would have to pay.
The university continues to have record numbers of applicants each year. Will this fact keep some students from applying to USD?
Nothing has been cut for undergraduate students. When admissions applications go up, it’s an indication of how well USD is perceived and valued. When the number of applications for financial aid go up, that’s an indication of how many students need financial help to attend USD. The number of financial aid applications received has gone up each year since we’ve been in this recession.
What are some other actions by the federal government regarding financial aid that affect USD students?
There have been no federal financial aid cuts during this recession. While the government has not cut funding for the Federal Work-Study Program, it has redistributed the funds and provided higher Work-Study funding to those colleges with larger numbers of Pell Grant recipients. When the recession hit, a lot of public colleges enrolled larger numbers of Pell Grant recipients and became eligible for more Work-Study funding. USD has received less Federal Work-Study funding each of the last three years and, as a result, has had to raise the eligibility criteria for USD students. It makes it harder for USD students to qualify for Work-Study jobs. It’s happening at other colleges around the nation, too.
Even with financial aid, students still struggle to afford a college education. How can students help themselves?
We’ve always strongly advised USD students to apply to outside scholarships. Every year more students are doing it. In 2010-11 USD students received more than $4.2 million that, in most cases, replaced loans they would have had to borrow. OFA and the Copley Library at USD are both good sources for information when searching for scholarships. The OFA has the Guide to Outside Resources of Financial Aid and there’s an Outside Resources bulletin boards near its third-floor office in the Hughes Administration building. Copley Library has reference publications and a USD Outside Resources collection at its reserve desk for interested students.