Bush Will Sign Bill Increasing Pell Grant Funding

In a not-too-surprising announcement after all the recent bad news about student loan firms—and in an apparent “victory” for both Bush and Congress—the White House said today that President Bush intends to sign into law a bill that reduces federal subsidies to those firms, including Sallie Mae, by $20.9 billion over the next five years, and will instead use that money to increase funding for Pell Grants (which recipients don’t have to pay back).

Current Pell Grants top out at $4050, but the bill will gradually increase that to $5400 by 2012. The bill will also temporarily reduce interest rates on need-based student loans from 6.8 percent to 3.4 percent over the next four years (the reduction will expire two years after that).

“Lawmakers to Cut Subsidies To Student-Loan Providers” [Washington Post]

Department Of Education Busts Student Loan Party Once And For All
Cuomo Goes After Student Lending Criteria, Is So Not Bored Of This Investigation Yet
Private Student Loans Are Potentially Evil
Department Of Education Sends Warning Letters To 921 Colleges
(Photo: Getty)


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  1. cedarpointfan says:



  2. InThrees says:

    I find this article (and the picture) particularly humorous and relevant because a) I am a student again and b) I am considering scrounging for nickels to go buy some ramen noodles, because my new boss forgot to get me onto the payroll.

  3. Namilia says:

    Has to be a dream, Bush can’t do anything right *slaps self*

  4. Thaddeus says:

    My college usually jacks up tuition about 5% every year, so that extra Pell money will only offset the usual yearly increase in tuition. I think. To qualify for Pell you and your family needs to have a low EFC (expected family contribution) as determined by the FAFSA. I think right now it is and EFC of about 4100. Obviously if you have a zero, you’re going to get the full amount.

    I’m happier about the 3.4 percent rate thing. Being a Grad Student all I can get is Stafford Loans so any reduction would be fantastic.

  5. bnosach says:

    How about lowering the tuition instead of this meaningless increase?

  6. wesa says:

    What happens when you’re a student and also employed? Pell grants are only for those in need. I’ve been in college for just over a year now and have yet to become eligible for a Pell grant. Congress would do better to work on lowering tuition and textbook costs.

  7. Falconfire says:

    @wesa: agreed Pell grants only support people in need who have no income, not people who make a minimum of income. And at this point even making 60-70 thousand a year is not enough to pay for college costs at a state school AND keep a household running.

    I got royally screwed on my college education because of this fact. My parents where considered to make too much money (and barely at that) despite supporting 2 kids through college, so I could not qualify for ANY assistance. In the end loans where all I could get on top of what I won.

  8. EricaJoy says:

    Can I have a bitter party for just one second?

    Pell Grants do diddly squat for middle class students. Either your parents can afford to pay your tuition or they qualify for food stamps so you can get a Pell grant. Otherwise you’re stuck with ridiculous student loans.

  9. darkclawsofchaos says:

    for those whining on tution and textbook costs, it will never happen. Tutions are set by the city/state/private institution running the place. Textbooks are an evil union, they all write books and keep their prices high, professors don’t compete for sales usually and they only get a small percentage out of the profit, the publishing company hogs it all.

  10. holocron says:

    I’m sorry, but this doesn’t impress me. It is good, yes. But until they do something about those of us in our 30’s-40’s with existing students loans–like changing payment to a tax credit as opposed to a deduction–little will help. IMO.

  11. copious28 says:

    I find it humorous that Bush froze Pell grant funding in all budgets since he took office–even though the cost of college as gone up 47% since 2001. Then to fund this “increase,” he cuts student loan money. Isnt that robbing Peter to pay Paul? Different kinds of students depend on student loan money than Pell grants, as previously stated.

  12. phoenixcat says:

    Back in the day, I worked and still qualified for a Pell grant– it helped a lot! I did California community college to start, and it was an awesome basis for my 4 year degree.

  13. endlessendres says:

    @ERICAJOY, I agree completely. It just sucks.

  14. frijoles99 says:

    I agree with you the California community college system prepared me for UCLA I paid about 1000 dollars a year in tuition to the Community college and at UCLA I have a free ride because I went to a community college. I even have honors at UCLA because my community college had an honors program. The best thing I ever did in my life was go to Community college and Transfer to UCLA

  15. Caroofikus says:

    I’m confused here. The government gives them billions of dollars, and then they make interest on it? That would mean they’re making interest on MY tax dollars. That would be over $1 Billion in interest that these companies make per annum at 6.8%, and on money that was just given to them. Am I right, or do I just have no idea how this works?

  16. Elviswasntmyhero says:

    So now this shameful charlatan of a President–puppet of the Neo-Con Right, bane of the Spineless left–wants to somehow “punish” his corporate benefactors by helping out college-age kids??? The same ones who are to lazy and dumb to vote (Hey there, Miss Teen South Carolina)?

    “The U.S. Census Bureau statistics for the November 2000 elections show that 67.7 percent of eligible voters ages 18 to 24 did not vote. The U.S. Census Bureau reported most registered voters actually did go out and vote, making the younger demographic stand out.”

    That makes about as much sense as claiming that weapons of mass destruction exist in a third-world country run by a tin-pot dictator as a pretext to…

    Never mind.

  17. Parting says:

    Why not offer only goverment loans with a fixed interest rate?

    That way, private companies wouldn’t be able to abuse students.

    And even if rates would be smaller than private loans, goverment would still collect profits on interest rates for itself. (and if profits were reinvested in education, that would be even better).

  18. Namilia says:

    @wesa: Agreed..I was a full time student employed part time barely making 100/week if I was lucky, and yet every time I applied for Pell Grant aid, I was denied on the grounds I MADE TOO MUCH MONEY. Tuition did keep going up as did the costs of textbooks (seriously, do they need to change editions EVERY SINGLE YEAR?) and had I not saved up some money when I was younger, I really would have been screwed. Ironically, now that I have my degree I am finding it exceedingly difficult to find a job…

    Tuition costs need to be lowered in addition to the Pell Grant increase, and Pell should be extended not only to those with no income, but also those who do not have sufficient income to survive and go to college. There would need to be a cap so that the system wouldn’t be abused, but denying aid to some individuals who could really use it is ridiculous. I’m sure they could find some budget fat they could trim out to cover the cost.

    Of course, applying for scholarships also helps (provided you are awarded one), but those can be quite difficult to obtain and are not the focus of this article.

  19. Alvis says:

    I used to work for the VP of Development & Alumni Relations at a top-tier USN&WR-rated university.

    It SICKENED me to see all the money the trustees gave earmarked ONLY for programs supporting their own religion, ethnicity, field of study, or to build a new building with their name on it (this university’s biggest kick at the time was expansion).

    There was no reason why the school couldn’t have gone need-blind with its admission policy, like Harvard, if only that money went to the endowment rather than pet projects. The trustees were supposed to support the University as a whole, but so long as they gave enough money to something or other, no one said anything.

    After four years, I couldn’t live with myself working there any longer, so I left.

  20. Namilia says:

    @Elviswasntmyhero: I truly am disappointed in my generation. The great majority seems to believe that their vote does not matter, and that everything is already rigged under the table.

    Then again, with elections like the 2000 Presidential in Florida, it is difficult to keep trust in the government as well. I may not be the smartest person of my age group, but at least I have voted every election since I turned 18 (I’m in my 20’s).

    I believe part of it is the education system (I cannot believe they still teach the ‘linear’ political party model instead of the four square as if its black and white…oh wait yes I can), part of it is the current administration, and part of it are report after report of “X politician wrapped up in X scandal/controversy”

  21. Caroofikus says:

    @Elviswasntmyhero: Maybe they just couldn’t find the voting locations. If only the maps to our election places weren’t in the Iraq umm uh…..

  22. Trai_Dep says:

    Okay so grants will increase over 5yr by about a grand. Need-based loans (no specifics on what’s qualifying or what’s the ceiling) have subsidized rates cutting about 7% to about 3.5%. For the lifetime of the loan? What if refinanced?

    And of course, this expires in 6yrs.

    Knowing the Bushies’ love for destroying lives, I’m wondering if a “gift” of a grand (a pittance in relation to annual tuition) of Pell Grants comes at the expense of tens of thousands of dollars in student loans.

    Trojan Horse? Bait-and-Switch? Trying to think positive, but it are the Republicans we’re talking about.

  23. veronykah says:

    When oh when will someone do something about all of the people who have loans that were taken out during the lender free-for-all that has been happening in the last 5-10 years?
    I know several people that are paying in excess of $500 a month [including myself] on student loans.

    The cap on the amount allowed for federally subsidised loans is ridiculous. I ended up taking out MORE in private loans than government loans, simply because the amounts I was allowed combined WITH scholarships and grants still didn’t cover the cost of college.
    I also take issue with the fact that student loans are one of the few [only?] loans that you can not get out of paying. Through some intense lobbying, the loan providers seem to have paid off Washington in the expense of their constituents.
    You can read story after story about the shady practices of student loan companies at
    You may not be a fan of Ted Kennedy but if you go to his site you can tell your story and fill out a form and advocating the Student Debt Relief Act..
    Another great site…

  24. EtherealStrife says:

    Gah this should have gone into National Merit. Reward intelligence, not fiscal irresponsibility!

  25. mac-phisto says:

    classic give an inch, take a mile. pell grants have needed an infusion of money for a loooong time, as does all student loan money.

    $5400 for the poorest among us at a time when tuition at virtually any college or university is $15,000-$50,000/year.


  26. bohemian says:

    A few years ago Bush quietly cut pell grants. Then about four months later

  27. bohemian says:

    Grr. posted itself?
    Bush later “increased” pell grants and acted like he was a hero. Never mind he cut them by more than he later increased them. Talk about a shell game.

    If they really want to do something they need to yank the private profit making out of student loans. Make all loans govt. loans with low interest rates. Cut ALL of the third party scavengers out of the process. They also need to have Waxman do an investigation of the textbook industry. I worked a project that involved the textbook industry, so I saw what an absolute scam it is from the inside. One university was bullying students to not have book exchanges on the plaza at the end of the year. The current scam seems to be using a new edition of the same book every year so people can’t sell student to student.

    Employers are complaining there are not enough qualified potential employees, while we are making it as hard as possible for anyone to get an education unless they have a huge trust fund.

  28. ganzhimself says:

    My current feelings on the whole grants/loans situation is this: I’m an independent student, living on my own, working full-time, and going to school part-time… Here’s the kicker, I’ve been in school 5 years now, since I’ve been going part-time. I was told by the financial aid office that I was maxed out on my stafford loans. Since I’m 23 I’m classified as a “dependent” student, which means my parents are expected to contribute a sizable chunk, if not all of my tuition expenses and I’m not able to get any more loans until next school year. Well, I’m paying out of my pocket, even though I can’t really afford to now. The rules for Stafford loans need to change, I mean, I only needed $1500 to finish school. The only way I could be declared independent was to prove that I was disowned by my parents or join the military. Neither of those things were happening.

  29. ganzhimself says:


    Yeah, the caps suck. I have almost as much in private loan debt as I do in federal loan debt… The gov’t won’t give me any more money, even though I should qualify as an independent student, but since I’m only 23, I’m screwed. I guess I should have worked full-time and went to school full-time last year so I could have graduated.

  30. Trauma_Hound says:

    Why should I pay to educate your child, when I can’t even afford to educate my own child by the time she’s college age?

  31. Trauma_Hound says:

    Why should I pay to send your kid to college when I won’t even be able to send my own kid to college by the time she’s old enough to go?

  32. mac-phisto says:

    @ganzhimself: try private aid from your college – they always have money stashed away somewhere in those FA offices. i was two weeks away from graduating & i still owed the university $2500. i sat down with a financial aid manager (not one of those work-studies on the frontline) with my transcripts & all of my banking information in front of me & told her flat out: i need something to pay this. i don’t have the money. i’m about to graduate, but i’m telling you that if i can’t take care of this now, i’m going to have to drop out – 3 credits away from graduating.

    turns out, penn state had a hardship assistance program that they were able to squeeze me into so that i could graduate. without that, i never would have received my degree.

  33. ganzhimself says:


    I’m paying for this semester out of my pocket… Pay now instead of later, I guess. I was hoping to save some $ for setting up an emergency fund (for student loan payback, rent, etc… if I lost my job), but that’s going to have to wait now.

  34. IndyJaws says:

    Did you get a good description of the gun pointed to your head when you agreed to take out the student loans? Did it not occur to you that you may need to pay them back at some point? Why do you think you should be able to get out of paying them? So the rest of us can cover your poor decisionmaking?

    Instead of blaming the companies offering the loans, why don’t you voice your disapproval about the high cost of tuition? The way I see it, it’s no different than racking up a large credit card bill buying gas for your SUV and blaming Visa for the interest charges, rather than taking umbrage with the oil companies for their profiteering.

  35. coreyander says:

    @Trauma_Hound: I don’t know… why should I pay into social security to pay for your retirement when it probably won’t exist when I need it?

    I’m sure you would love the kind of dog eat dog, zero-sum world you propose, where each of us considers only their own needs without regard for the social contract that exists between those of us sharing a society.

    To answer your question seriously, though, a tiny percentage of your tax dollars will go to Pell Grants for students (like your daughter) who can’t afford an education on their own. These individuals will finish their education, enter the workforce, and pay taxes. Granted, a higher percentage of our tax dollars will go to corporate subsidies and the military industrial complex, but we’ll just focus on this one tiny, underfunded program. Anyway, someday, when your daughter is old enough to apply for college SHE will apply for the same aid that you are bitching about now. Of course, then you will be happy to take any grant, federally subsidized student loan, or work-study guarantee that comes her way without the least bit of concern for the taxpayers who do not (yet) have college age children.

  36. coreyander says:

    @IndyJaws: Come on, you know that no one wants to take out student loans. Tuition and fees are unreasonably high, but so are the terms placed on some student lenders. In so many cases, large student loans are the difference between getting a degree and being forced to drop-out after essentially wasting several years tuition on a degree that one cannot afford to finish. It isn’t fair to compare the cost of an education to the cost of a useless luxury like gas for your SUV. If this country can afford to subsidize corn production like it is going out of style, we can afford to treat students a little better.

  37. Trai_Dep says:

    Something lost in the shuffle is that, up until the ’80s, education was inexpensive because localities subsidized it to a vastly greater degree. Silly notions that making education universal, top-notch and accessible is better than building prisons and funding prison guard unions. Then old troglidykes whined, “Waaah – I don’t like paying property taxes like my parents’ generation did to make education cheap for me!”

    And colleges and universities had to hike rates. Then hike rates. Then hike them again.

    Instead of increasing grants to offset this, our Republicans – fighting communism, to be sure – slashed them. Then took a perfectly functioning gov’t run student load program and quasi-privatized it while establishing unrealistic ceilings, forcing students to sign their souls partially over to private banks overcharging for risk-free loans. Made 100% safe by the gov’t.

    It’s madness.

  38. mac-phisto says:

    @trai_dep: i wholeheartedly agree that anyone who desires an education should have access to it. unfortunately, i think government subsidization of college tuition contributes to the problem of massive tuition hikes. how does an endless supply of federally-guaranteed money restrict cost? if anything, it makes things worse. the guarantee of access makes schools flush with money & applicants.

    i mean, where does the money stop? should we really be investing in everything that colleges & universities have to offer? on one hand, they offer top-notch education. on the other, they are rampant with corruption, inefficiency, & the bullshit politics of academia. maybe tuition wouldn’t be so high if they didn’t give every schmuck on the payroll a quarter-million dollar expense account.

    then there’s the heavy hand of regulation that comes with every dollar the feds hand out. look at how bad the dept of ed has effed up public schools. they’ve got our kids taking so many goddamn tests they don’t have time to actually learn anything (except maybe how to fill in a SCANTRON bubble).

  39. ShadowFalls says:

    Doesn’t do much for those who already got their loans though… This will only counter the rising costs of tuition, the loans will not change very much.

  40. Trai_Dep says:

    Mac –

    Schools are public or nonprofit institutions with open books that are accountable to their citizens. If they’re overspending, it’s a simple matter to rein them in. Simple fact is that they’re overcrowded because we’ve under-invested in them while the second baby bubble was forming, so now that they’re here, it’s much more difficult (read: expensive) to catch up. There are also a host of unfunded mandates of little use (No Child Left Behind, Zero Tolerance madness, mishandled No More Columbines…) that also inflate their budgets.

    Treat today’s kids the same (or better) that last generation treated us. It’s that simple. And we’re failing. That’s simply immoral.

  41. alteredcarbon says:

    What a complete and utter ::JOKE::