House Republicans Seek To Cut Pell Grant Funding, Raise Interest Rates On Student Loans

Thursday, March 29, 2012

U.S. House Republicans -- saying they need to curb tuition inflation -- are seeking to raise the interest rate on federal Stafford Loans from 3.4 percent to 6.8 percent and cut funding for Pell Grants, which is a form of financial aid for the most financially needy students.

Last year, 9,500 students at CU-Boulder received Stafford loans, according to Gwen Pomper, director of CU's financial aid office. Also, on the Boulder campus, 15 percent of in-state students and 7 percent of out-of-state students are eligible for Pell grants. That compares with 11 percent of in-state students and 4 percent of out of-state students in fiscal year 2008-09.

The budget proposal also would eliminate the in-school interest subsidies for undergraduate students --meaning students would be required to pay interest on their loans while they're enrolled in college. Now, students don't need to start paying interest until six months after they've graduated, Pomper said.

On July 1, a law will be enacted that requires graduate students to pay interest on federal loans while they're still in school, she said.

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