College and the Deficit Commission

With the release of deficit commission report by Erskine Bowles and Alan Simpson earlier this week, everyone now wonders what this will mean for government programs and taxes. The report has implications for higher education too. According to a piece by Forrest Hinton at Education Sector, one recommendation could have serious implications for American colleges:

Eliminate administrative fees paid to schools for student aid programs. According to the co-chairs, colleges participating in campus-based aid programs, like Federal Work Study, as well as colleges whose students receive funding from the Federal Pell Grant Program, are already benefiting from federal aid, so they do not necessarily need funds to cover the administrative costs of these programs.

…Talking Points Memo is also reporting this recommendation: “Eliminate subsidized student loans, in which the government makes interest payments while the student is in school.” If this federal cost-cutting measure is adopted, it would have the most significant negative impact on students, since tuition continues to rise at steep rates all across the nation.

Now, granted, this is a “planning document”; the recommendations of the commission will never be adopted as written, not that they’re really that great anyway.

But then, the thing about the deficit commission report is that it’s designed to get people talking about how to reduce government spending. If eliminating subsidized student loans is on the table that indicates the United States has some very interesting spending priorities.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer