Congressional leaders appeared late Sunday to have reached a deal on increasing the nation’s debt limit that would avoid many of higher education’s worst-case scenarios: cuts to Pell Grants, the end of subsidized student loans, or a government default that would leave student financial aid and other funding for colleges in limbo going into the fall semester.
But as details about the deal began to emerge Sunday evening, it became clear that the plan leaves colleges and universities with plenty of long-term uncertainty.
The plan, which will be presented to Congress today, gives President Obama authority to increase the debt limit by at least $2.1 trillion and calls for at least $2.4 trillion in spending cuts over the next 10 years. About $900 billion in cuts would take effect immediately through discretionary spending caps. The rest would be decided on by a Congressional "super-committee." If the committee does not reach an agreement by Thanksgiving, $1.2 trillion in cuts would automatically go into effect in 2013, including cuts to defense spending, domestic discretionary spending and some entitlement programs.
Some details on the deal were still unclear as of last night, including what discretionary spending would fall under the automatic cuts (though the White House mentioned education as one of the areas that would face automatic cuts if the committee could not agree) and how the $900 billion in immediate cuts will be distributed. But the situation is overall less dire for federal financial aid programs than it seemed earlier in the debt talks, when proposals were put forward to cut Pell Grants and eliminate subsidized student loans.
The White House said in a fact sheet posted online Sunday night that the deal was "designed to protect crucial investments like aid for college students," giving "specific protection in the discretionary budget" to ensure that there will be sufficient funding to keep Pell Grants at their current level. Previous plans from both Senate Majority Leader Harry Reid and Speaker of the House John Boehner had directly appropriated funding for Pell Grants in 2012 and 2013.
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