NAICU Washington Update

Debt and Deficit: The Silence Behind All the Noise

July 13, 2011

All of Washington is on pins and needles as the debt ceiling and deficit reduction drama plays out on the stages of the Capitol and the White House.  Even the student aid experts are caught up in this political game of chicken.

This is a town that abhors a vacuum, and tends to fill one with news conferences and media interviews.  Beyond the dueling sound bites between President Obama and Speaker Boehner, and interviews with other leaders involved in the discussions though, little substance is to be had.  No details are being released on specific program changes across the government.  Budget experts say this is the tightest, leak-free negotiation that has gone on in this sieve-like town in years.

This we do know:  The student aid programs are still in jeopardy.  The in-school interest subsidy on student loans has been on the table for deficit reduction since the beginning of this exercise in December.  And the Pell Grant program has grown to $34 billion, putting it in an $11 billion hole for next year.  NAICU and other student aid proponents are especially concerned that low-income students could be hit with a double whammy - taxed on their student loans at the same time their Pell Grants are cut

Meanwhile, out of camera range, work is being accomplished on Capitol Hill.  While the high-level negotiations on the debt ceiling continue, appropriations staff are preparing to write the FY 2012 education funding bill - but with $19 billion less than last year, and with that $11-billion Pell Grant hole to address.  They are moving the fiscal playing pieces around to maintain the highest maximum grant possible while trimming some of the elements causing the program costs to grow. 

NAICU continues to talk with Hill staff on the best-of-a-bad-lot options that will do the least harm, and at the same time is working to protect the other student aid programs, which we believe have grown precisely because they are working as designed in this economic downturn.

The powerful advocacy efforts by member presidents - in tandem with the state executives and Secretariat - have been at the heart of NAICU's efforts (though it's meant a higher level of e-mail traffic from the association than any might wish).  We'll keep you apprised of the twists and turns, challenges and chances, as the July 26 House mark up approaches, and the debt ceiling negotiators count down to their August 2 D-Day.

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