NAICU Washington Update

Deal or No Deal? - Pell Grants in the Budget Mix

July 30, 2011

(Updated 11 a.m. Saturday, July 30)  As Washington hurtles toward August 2, the House and Senate leadership continues to work on a debt ceiling and deficit reduction deal to avert a domestic and global economic crisis.  A key pawn in the negotiations is Pell Grant funding.  Plans from both House Speaker John Boehner (R-Ohio) and Majority Leader Harry Reid (D-Nev.) have included funding for the Pell Grant program for the 2012-13 award year.

Boehner's bill was approved by the House late on Friday, then as expected, was quickly voted down by the Senate.  Action now continues in the Senate where, according to Reuters, Reid has revised his debt-limit bill on Friday to incorporate elements of a "backup plan" first proposed by the Senate's top Republican, Mitch McConnell.  Up next is a 1 a.m. Sunday vote in the Senate to close debate on the Reid proposal.

If the Pell Grant funding is not included in the budget deal, other priority student aid, education and health program funding will be in jeopardy of deep cuts in the FY 2012 appropriations process this fall.  Already, Congress has cut $9 billion from the Pell Grant program this year by eliminating the year-round Pell provision.  Also, funding was eliminated for LEAP state grants, graduate education programs, and there have been cuts in SEOG, TRIO and GEAR UP. 

NAICU issued an action alert to its members on Friday, asking that they contact their congressional delegation on keeping the Pell Grant funding in the budget deal.

Also complicating negotiations in the House are concerns about raising the debt ceiling immediately, but then achieving deficit reduction over a 10-year period, as well as the lack of a constitutional balanced budget amendment as part of the package. 

As the arm-twisting and bill-revising continues in the House, we anticipate that the Senate will file cloture on Reid's bill, moving that bill toward a vote by the end of the day on Sunday. Reid and Minority Leader Mitch McConnell (R-Ky.) continue actively negotiating, given that 60 votes will be needed to pass anything in the Senate.

Beyond all the congressional activity, Treasury Secretary Tim Geithner is expected to release a contingency plan highlighting the fact that interest on U. S. bonds and debt will be paid first, if the debt ceiling is not raised.

NAICU will continue to monitor this rapidly-changing situation and its effect on student aid funding.  For the most recent developments, however, we suggest you track the twists and turns through the extensive coverage of the story by general media outlets.

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