Report: Removing bank subsidies would up Pell Grants

LANSING, Mich. – An additional 260,000 students, including about 9,000 in Michigan, could receive Pell Grants to help pay for college if  lender subsidies are cut, according to a study by the Campaign for America’s Future. As reported in the (California) Press-Enterprise, the study showed that the average grant would increase by about $121.

President Barack Obama’s budget proposal calls for eliminating a federal loan program that, according to the study authors, excessively subsidizes banks that loan money to college students. If adopted, the move would shift $47 billion over five years, The Press-Enterprise reported, with $5 billion directed to students as of 2010-2011.

In its analysis of Michigan, the Campaign estimated that the number of grant recipients would increase from about 181,000 to about 190,000, with the average award increasing from about $3,049 to $3,163, the report said.

The added funds likely would make awards available to more students of families in the $60,000 to $70,000 income range, according to Christine Lindstrom, higher education director of the U.S. Public Interest Research Group, The Press-Enterprise reported.

The (California) Press-Enterprise, “Report: 30,000 more California college students would benefit under Obama proposal,” March 26, 2009

The Campaign for America’s Future, “Obama’s Budget: Supporting students, not banks,” March 26, 2009

Mackinac Center for Public Policy, “Private, Prepaid Tuition Programs Can Help Make College Affordable,” Sept. 5, 2001