<p>The new debt compromise may eliminate federally insured Stafford loans for grad students and professional students starting May 2012.</p>
<p>See Forbes article: Debt</a> Ceiling Plans Take Aim At Graduate Student Loans - Janet Novack - Taxing Matters - Forbes</p>
<p>If it goes how the article says, then I’m ok with the compromise to get rid of subsidized loans in order to save cuts to the Pell grant program.</p>
<p>The proposal earlier this year was to still offer Stafford loans for grad and professional school, but not to subsidize the interest while in school. Is the plan now to get rid of them entirely? (For some reason, I can never read Forbes blogs on my computer, so I can’t read the article).</p>
<p>I just read a report that said the Feds are making a nice profit on direct student loans.</p>
<p>[Debt</a> Ceiling Plans Converge: Reid and Boehner Include Pell Grant Funding | NewAmerica.net](<a href=“http://edmoney.newamerica.net/blogposts/2011/debt_ceiling_plans_converge_reid_and_boehner_include_pell_grant_funding-55366]Debt”>http://edmoney.newamerica.net/blogposts/2011/debt_ceiling_plans_converge_reid_and_boehner_include_pell_grant_funding-55366)</p>
<p>More detail at the link. This current plan seems to be consistent with what was announced by Obama several months ago in a previous budget deal. Obama’s priority is to maintain current levels of Pell grants for fall and spring semesters. That cost has been exploding (partly because of reduced incomes from the recession and partly because of abuses by for-profit diploma mills). </p>
<p>To cover the increased costs, the proposal is to no longer subsidize the interest on loans for grad and professional students while they are in school. The interest would accure and could be folded back into the loan, but would not have to be paid while in school. That is the way unsubsidized Staffords work for undergrads. The availablity of the loans would not be eliminated.</p>
<p>Personally, I’d rather see subsidies of the first year or two of grad and professional school. However, we are spending way too much Federal money subsidizing crappy law schools that have greatly increased the total number of law school grads in recent years, and people getting PhDs in non-technical fields with no prospects for gainful employment.</p>
<p>Unfortunately, sooner or later Pell grants and all type of government aid have to be on the cutting board. Stafford will have less support as Sallie Mae and others would prefer that Stafford not be there. </p>
<p>Pell grants will have active lobbying to save it as the for profit institutions thrive on it, but I think it is time that some performance criteria be used for Pell grants also. If the person does not complete the program, then they need to pay it back. Harsh possibly, but with the deficit being the way it is, there are no easy options.</p>
<p>I cannot imagine they would entirely drop Stafford loans. Grad students pay 6.8% interest, it’s a return for the govt.</p>
<p>@maze- What about restricting Pell grants to public institutions only?</p>
<p>They should limit how long you can get Pell grants for (and I say this as someone whose family has benefited from them). Currently you can get them for something crazy like 18 semesters. Should be limited to 8 or 10 for full time. Part time should be some amount related to enrolment - so a student going half time and just getting half Pell can get it for longer. Something like that.</p>
<p>And I think lmiting it to public institutions is a good idea.</p>
<p>I agree with restricting Pell Grant and CAL Grant to public institutions only is a good idea.</p>
<p>I am not sure it is such a great idea to restrict it to public schools, we see many people post on CC that they get a better deal from private schools then public, not just tippy top, well endowed, NYPS type schools, but also mid range, merit awarding smaller privates. That takes many kids out of the public school pool which means fewer kids fighting for those classes.</p>
<p>I can see the point with some of the well-endowed schools, if they can meet so much need, them meet that extra $5k, but most of the other privates do not have that budget. Plus it probably doesn’t help save money, it just causes more kids to choose the public option and still take the Pell.</p>
<p>Unfortunately you cannot have rules that depend on endowment. Public/private could be an easy to enforce option but there are going to be exceptions. Would Cornell be considered private as it consists of nine privately-endowed colleges as well as four publicly-supported “statutory colleges”?</p>
<p>Even if restricted to public, we still need to somehow ensure people graduate on time like Swimcatsmon says.</p>
<p>The problem IMHO is not public v. private - it is the for profit leaches. To call them diploma mills, when I suspect not so many kids even get diplomas? </p>
<p>The accreditation agencies are not doing their job. It is the same as the credit rating agencies in the financial world. For the money they get from the entites they are supposed to evaluate – they give access to public money.</p>
<p>I think it is terrible to do away with Stanford loans for grad school. These people have already proved they can handle academics and will pay 6.8% back on their loans. </p>
<p>I personally would like to do away with pell myself. I really think people make far better decisions with their own money. I have no problem with giving the $5,500 with out any interest charges but they have to pay it back. I think it would be great to offer loans for full tuition and fees at no interest to the poorest. The limit would be the amount equal to attend your state’s highest college tuition. They could attend privates but only the cost that a state college costs would be covered. The government covering the cost of interest is far less expensive than just handing over $5,500 without any strings attached. We could also raise the income limit so that more lower middle class and middle class students could take advantage of the program. To many of the middle class is shut out of college. I personally know what it is like to get shut out. I would be very happy with this offer back in the day.</p>
<p>In my opinion, covering the entire cost of college with loans is a terrible idea, especially for the poorest of the poor. I’m financially disadvantaged myself, and while I’ve done well in school, those I know that have struggled have not done so because of poor decision making or lack of drive, but because it is incredibly difficult to be going to school while working and taking care of other obligations that get in the way of schooling. My brother, for example, financed his degree in computer science through loans and working full-time through school, but he struggled a lot and his grades suffered for it. </p>
<p>I can tell you right now that I would probably be going to college if it weren’t for grants such as Pell and TAP and the scholarships that I have worked very hard to earn. So obviously I feel very passionate about this. At the very least, I don’t think that I’d be able to pursue my ultimate career goal (becoming a school counselor) because it wouldn’t make financial sense to take out tens of thousands in loans to get an undergraduate degree in psychology and to then go to grad school for the salary that I will ultimately earn. Even for more lucrative careers, I don’t think we’d be helping anybody’s social mobility by saddling them with thousands in educational debt in a really rough economy. </p>
<p>I think the whole private versus public issue is a tough one. Thinking of my little brother, he is studying engineering and honestly the state options from my experience were pretty sub-par. Also, when I was a freshman I studied occupational therapy which IIRC is only offered by one public school in state, which was too far away for my family to transport me to. However, I do see that it is important to make compromises, so this is one that I would understand, but I definitely think it should not apply to those who are already matriculated at private schools (as is my brother) who have already factored these funds into their financial decisions to attend a particular college.</p>
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<p>Oh, I’m sorry, I should take out an ADDITIONAL $22k in loans to go to my public state school? Because that’s what I’d be looking at. I’m already over my max for Stafford loans to go to a public, in-state school. I work 2-3 jobs to pay for what my aid doesn’t cover. What else would you like low income students to do? With no aid, I’d be looking at $100k in loans to go to a public in-state school when my parents make under $30k a year. That is ridiculous. If I took time off to work rather than go to school, I really wouldn’t be better off. The unemployment in my area is ridiculous and I can’t find a local job. The best paying job I have, I am able to get because I am a student.</p>
<p>ETA: I do have some scholarships, but even the scholarships I have don’t make a significant dent. Almost everything I do have comes in the form of FA grants.</p>
<p>PELL is for those who don’t have the money. They are for our most economically deprived students.</p>
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<p>True… but I don’t think that we give federal aid to k-12 students who want to go to private schools (someone correct this is I’m wrong, because I very well could be… I’m not a parent lol). We have public Us for a reason. If you want to go to a private U, that’s fine, but I really don’t think it should be subsidized by the tax payers if cuts have to be made. I just think it should be cut for privates to try to save it for publics.</p>
<p>I agree that if there are any cuts, they should be for private schools. There are areas in the federal student loan/Pell area that can be cut. The problem is that now that we are in the 11th hour with this whole thing, I doubt very much that anyone is watching where the cuts are best made. I would prefer to see a cut or elimination in PELL and/or subsidized Stafford monies to be made for private schools, for example, over an overall cut in the limits. The private schools will have to ante up additional funds for those students, but by cutting the funds for the publics can mean that a lot of students will not be able to afford college unless those cuts are done carefully and according to guidelines which I doubt will be made at this time.</p>
<p>It’s no tragedy for a student not to be able to go away to a private school , but when public schools become unaffordable, then that means the college option is out for those students in the lower economic brackets.</p>