Penn grapples with debt crisis aftermath

This summer, the United States debt ceiling crisis nearly toppled the country’s economy and forced massive spending cuts that have left Penn’s administration concerned about looming budget decisions.

The Budget Control Act, signed into law by President Barack Obama on Aug. 2, was the result of compromise and scrambling by both parties in Congress to avoid defaulting on the federal debt. The bill specifies $917 billion in spending cuts over 10 years.

The Act also established a budget “super-committee” to find another $1.5 trillion in spending cuts. According to William Schilling, director of Financial Aid, Penn’s financial-aid policy “stayed and will stay the same — full need and no loans.” However, “any further cuts would make it harder” to maintain this commitment.

Among the ways the resulting compromise has affected the University so far are federal grants for student financial aid, the way graduate students will be able to pay off loans and federal research funding.

“One of the best outcomes is that Pell Grants were the only area of the federal government that got an increase in funding — $17 billion,” said Dawn Maglicco Dietch, director of Penn’s Office of Government and Community Affairs. The Pell Grant program awards need-based grant money to low-income students.

The OGCA is a lobbying group that “represents the University’s interests at every level of government that affect how Penn operates,” OGCA Vice President Jeffrey Cooper said. The OGCA makes sure “our voice is heard,” Cooper added, by working with city, state and federal governments.

Though funding for Pell Grants increased, an already-existing deficit for the program meant that students won’t see an increase in grant money.

“The appropriations covered that deficit, but the [maximum grant] amount given stayed the same” at $5,550, Schilling said.

Unfortunately for Penn graduate students, interest subsidized loans for graduate and professional students have been eliminated by the bill, which “will make their loans more burdensome,” Schilling said.

Penn is taking an active role in the federal and state budget debates leading up to the final compromise. Michelle Brown-Nevers, associate vice president of Penn’s Student Registration and Financial Services, went to Washington, D.C. over the summer to speak with the offices of Senators Bob Casey (Pa.-D) and Pat Toomey (Pa.-R), as well as Representative Chaka Fattah (Pa.-D) to make sure they were aware of how Penn’s community would be affected by federal cuts to student financial aid programs.

She said her message was, overall, “received really well.” However, she added she had concerns after speaking with one of these congressional offices which she declined to identify.

Penn President Amy Gutmann has also added her voice budget debate. “I have written to all of our representatives, our Pennsylvanian delegation to tell them what I think are the priorities for higher education and Penn,” Gutmann said. “I’m pleased that Pell Grants have not been cut, but there have been cuts and proposed cuts that would be detrimental to students, both undergraduates and graduate students.”

Gutmann expressed her support for protecting funding for programs such as the Pell Grants, TRIO, Title VI and the Federal Supplemental Educational Opportunity Grant. “Cuts have to be made, and I have used whatever influence Penn and I have to indicate how counterproductive we think it would be to cut the engine of innovation for our society.”

Please note All comments are eligible for publication in The Daily Pennsylvanian.