After much political drama, the House of Representatives has finally passed the Budget Control Act of 2011, meant to stop the U.S. government from defaulting on its payments to U.S. government bondholders. This bill is bound to have many impacts, but for this particular post I will focus on Title V and its affects on graduate students, especially future social workers.
Title V consists of several parts:
$17 Billion to Save Pell Grants: According to a report released by the Congressional Budget Office (CBO), the Budget Control Act of 2011 will allocate $17 billion towards the Federal Pell Grant Program in the next 3 years. The Pell Grant Program provides financial aid to low-income undergraduate and certain graduate students who likely would not be able to afford college otherwise. Unlike loans, these grants do not need to be repaid.
Elimination of Federal Direct Stafford Loans for Graduate Students: Currently, college students with financial need are allowed to receive $8500 in subsidized loans a year. These are loans where interest is paid for until 6 months after graduation. Starting July 12, 2012, graduate students will only qualify for Federal Direct Unsubsidized Loans, which accrue interest while students are still in school. According to the CBO report, this will save $18.1 billion in the next 10 years.
Elimination of Incentives for On-Time Loan Payments: Subsidized and unsubsidized loans have a 1% origination or activation fee. Currently, students only have to pay 0.5% - half the fee - which is refunded if they make 12 on time monthly loan payments. Under the new bill, this fee will no longer be refunded. According to the CBO, this will save $3.6 billion in the next decade.
As a social worker, I find myself asking many questions. Is saving the Federal Pell Grant Program worth the financial hardship that will inevitably be faced by numerous graduate students as a result of higher loan payments? How will this affect the social work profession in the long run? Considering that an MSW's salary is much lower when compared to other professions with the same training/education level, will increased loan payments cause those interested in social work to pursue careers in more lucrative fields?
Seems like there might be some hard times ahead for students. The amount of barriers students face these days make me thankful that I was able to finish school when I did. My thoughts are with those who will be seriously impacted by this new budget bill.