Deficit-reduction plan could bring cuts to college financial aid

A graduation cap surrounded by dollars represents the costs of education.

Steve Chiotakis: As debt talks go on, one target for cuts is federal student aid.

From the Marketplace Education Desk at WYPR in Baltimore, Amy Scott reports.


Amy Scott: One plan in the Senate calls for $70 billion in cuts in health, labor and education spending over 10 years. Financial aid expert Mark Kantrowitz says cutting student loan programs would be short-sighted. Even with defaults, he says the government makes a profit on student loans.

Mark Kantrowitz: The government earns anywhere from 10 to 20 cents on the dollar for every dollar lent, so while it may reduce the national debt, in the long run, it means less money coming into the federal government.

But others aren't so sure the government should be in the business of lending money to students. Neal McCluskey is an education analyst with the Cato Institute. He says student aid programs are supposed to make college more affordable.

Neal McCluskey: But there's very good reason to believe that the more the federal government puts into aid, the higher colleges raise prices.

McCluskey says any deal will likely include cuts to the Pell Grant program, which helps low-income students pay for college.

I'm Amy Scott for Marketplace.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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