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US: 2012 federal budget represents a mixed bag for higher education

An unusual Saturday vote for the US Senate on 17 December 2011 capped a difficult period of negotiations on the 2012 US federal budget (which covers the fiscal year running from October 2011 until September 2012). However, the USD 915 billion (EUR 701 billion) spending plan is now in the hands of President Barack Obama, who has until 23 December to sign the bill into law. How did the higher education community fare in the process?

On the one hand, the final bill allows for the preservation of the current maximum Pell Grant award at USD 5 550 (EUR 4 250) per semester. The Pell Grant programme provides need-based grants (which do not need to be paid back) to low-income undergraduate students (and a small number of students already holding a bachelor’s degree) to promote access to postsecondary education in the United States. The 2012 budget introduces some new criteria for Pell Grant eligibility, however. Students must have a high school diploma or the equivalent. And, for a student to be automatically considered exempt from relying on any family support for studies, annual family income must be as low as USD 23 000 (EUR 17 600), down 23% from the previous standard of USD 30 000 (EUR 23 000). Also new: students may receive Pell Grants for a total of 12 semesters, rather than the 18 semesters previously allowed. While appreciation has been expressed for the continuity of the maximum Pell Grant award level, advocates for low-income, minority and community college students (amongst others) express real concern about difficulties presented to these populations in light of the income threshold change and the shorter duration of eligibility for Pell students. Also disappointing is the fact that the spending plan envisions additional savings through the elimination of the six-month student loan “grace period”. Until now, the federal government covered the interest accruing on subsidised federal student loans during the six months following a student’s graduation or other departure from higher education. This benefit will be discontinued beginning with loans issued in July 2012.

More broadly, the Department of Education faces minor across-the-board cuts of 1.8%. However, the research community fared slightly better. The National Institutes of Health will see a 1% growth in its budget for 2012. This is a slightly less generous boost than the 2.5% spending increase bestowed upon the National Science Foundation in separate legislation passed last month.

American Council on Education Inside Higher Ed