Policy Update: August 3, 2011
On August 2, 2011, President Obama signed legislation averting default on the nation's debt. The legislation cuts $1 trillion now and forms a commission to cut an additional $2 million over 10 years. Below are some details of the impact on student financial aid and research funding.
Federal Research Funding
The agreement backloaded cuts to discretionary spending, so the Fiscal Year 2012 budget that must be finalized by October 1 will contain spending reductions totaling only $25 billion (or 1%) below FY11. While research budgets for federal agencies may see slight reductions, these cuts are likely to be relatively small for the next two years (although likely below their recent levels).
Pell Grants/Financial Aid
Some $17 billion in mandatory (automatic) spending was included the agreement to largely protect Pell Grants for the next two years, although a small decrease in the maximum Pell award is still possible, contingent on the level of discretionary Pell appropriations to be made by Congress this fall. Pell revenue should remain largely stable for Northeastern for the next two years. Moving forward, we will also continue to advocate preserving funding for other federal financial aid programs not addressed in the agreement, including SEOG and Perkins.
The agreement also eliminated Subsidized Stafford Loans for Graduate and Professional Students beginning July 1, 2012. Instead, graduate students will be permitted to borrow an annual maximum in Unsubsidized Stafford Loans equivalent to the current combined annual Subsidized and Unsubsidized loan cap ($20,500 total).