Education and the Budget Proposal for FY08
Good news for the Department of Education, as it looks like the White House is set to increase the Pell Grant even more than the $260 proposed by the Democrat’s “Joint Funding Resolution” that I reported on Thursday, Feb. 1, 2007. According to a briefing titled “FY08 Budget Proposal” that appeared in the Feb. 5, 2007 issue of the National Council of Higher Education Loan programs, Inc.’s Daily Briefing, “President Bush this morning issued his FY 2008 budget proposal to the Congress that sets funding levels for the Department of Education and other federal agencies,” initially, “The proposal includes a $500 increase in the Pell Grant maximum award to $4,600.”
Graduated Plan
Similar to the interest rate cut on subsidized federal student loans proposed and passed by the House earlier this month, the increase in the Pell Grant would be laid out in installments, starting in 2009 and ending in 2012. The briefing reports, “The maximum Pell Grant would increase by $200 annually from 2009-2012 to $5,400,” the Daily Briefing reported.
For those of you not familiar with the Pell Grant program, it is defined by Loma Linda University (http://www.llu.edu/ssweb/finaid/glossary.html#P) as:
“Pell grants are awarded solely on demonstrated financial need to every eligible undergraduate student who hasn’t already earned a bachelor’s or professional degree. The amount of your Pell grant will depend on your financial need, your college costs, and whether you’re attending college full time or part time. The funds can be used for tuition, fees, and living expenses. For the 2006-2007 award year, Pell grants for full-time students ranged from $400 to $4,050.”
Other Allowances in the FY08 Budget Proposal
The FY08 Budget proposal includes spending plans for all areas of the government. However, the Daily Briefing went on to list only those areas that affect the student loan industry. Those include:
- “Increase the annual amount of student loans juniors and seniors can borrow by $2,000 to $7,500
- Reduce interest subsidies to lenders by .5 percent
- Reduce default insurance from 97 percent to 95 percent
- Reduce guaranty agency default collection payments
- Move guaranty agency account maintenance fees to a unit cost basis
- Increase consolidation lender fee to 1 percent”
It is important to keep up to date on all the news regarding student loans and education.
Talk to the education financial advisors at NextStudent. They have all the information and advice you need on student loans. Check out www.nextstudent.com.
Be sure to tune in next Monday for my next blog on student loan issues in the news.
Student Loan Girl