Pell is the bedrock of or federal financial aid system, helping low- and middle-income students access college. However, the looming sequester threatened to trim grants, making it harder for our generation to afford tuition. With costs rising and grant aid already failing to catch up, this could have been disastrous for students. Thankfully, Sen. Murray and Rep. Ryan saved Pell dollars from the chopping block, ensuring that those attending college can rely on Pell Grants for the next two years.
The budget deal does make two small changes to student loan administration to save the government money:
One of the provisions in the bill treats student loan guarantee agencies similar to other agencies that perform debt collection. Some borrowers will actually see a small reduction in the amount of debt that they owe under the policy. The Department of Education estimates this change could save 2.5 million borrowers about $450 million over the next ten years.
The second provision changes the way that the government contracts non-profit student loan servicers. According to Department estimates, non-profit servicers receive a premium to service student loans in comparison to other companies. The budget proposal eliminates that premium and requires these servicers to compete for student loan servicing contracts.