The student loan measure would be the biggest change in college assistance programs since Congress created them in the 1960s, ending a private-lender program by having the government originate all loans to needy students.
But facing savings smaller than anticipated from the switch and a shortfall in Pell Grant money for low-income students, Democrats are proposing no increases in Pell Grants over the next two years and a modest increase over the five years that follow.
"We're hoping by then our economy will be better, we will be out of the doldrums and we'll be able to address the situation at that time," said Sen. Tom Harkin, D-Iowa, the chairman of the Senate Health, Education, Labor and Pensions Committee. "What we're doing here is taking care of the next few years."
The maximum Pell Grant, which a House-passed bill last year would have raised to $6,900 over 10 years, will now only increase to $5,900. The current maximum grant for the coming school year is $5,500.
"This isn't even maintaining a fiction of maintaining the status quo," said Mark Kantrowitz, who runs the Web site finaid.org. "This is going to lose ground."
Consolidating the college aid package with health care could make it easier to pass the college aid plan in the Senate, where it seemed unable to muster 60 votes to overcome procedural hurdles. And it would give House Democrats a popular incentive to sweeten a vote for health care changes.
The House plans to take up the legislation this weekend. The Senate would follow next week.
The new bill would spend $13.6 billion to fill a financial hole in the Pell Grant program, but would still leave a $5.5 billion shortfall. Officials say a poor jobs market has driven potential workers to colleges and technical schools, putting a strain on the program.
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