Funding for Pell Grants was reportedly a major source of debate as Congress and the White House raced to raise the debt ceiling and avoid a financial default.
Advocates had feared dire cuts to the $23 billion program, which provides free college aid to high-needs students but is running an $11 billion deficit. But those fears were not quite realized, based on the final debt deal that Congress is expected to vote on today.
The deal, according to sources, would allocate an additional $10 billion to Pell in fiscal year 2012, still leaving a shortfall estimated at $1 billion. And it would provide another $7 billion in fiscal 2013. The spending would be accomplished by cutting loan subsidies for graduate students, which would save $18 billion, and eliminating rebates for student borrowers who make on-time payments. That would save another $3.6 billion.
The rest of the savings not reinvested in Pell, or about $4.6 billion, would be used for general deficit reduction.