The debt deal passed by Congress and signed into law today will step up Pell Grant funding in exchange for putting federally subsidized loans for graduate students on the chopping block.

The Budget Control Act of 2011 will not touch President Barack Obama’s $5,550 maximum Pell Grant award per undergraduate student and pours $17 billion into the program’s funding by 2015, but cuts the federal subsidy that previously reprieved graduate students from accruing interest on their loans while still in school.

About 11 to 12 percent of GW undergraduates receive Pell Grant awards in their financial aid packages. Associate Vice President for Financial Assistance Dan Small said in February more than 1,390 students received Pell Grants this year.

Congressional Budget Office estimates show the new measures will boost direct spending by $7.4 billion over the next four years but ultimately reduce spending by $4.6 billion by 2021.

Beginning July 2012,  graduate students with subsidized loans will not receive subsidies on their interest, making the students accountable for interest that builds up while they are in school to trim government spending by about $21.6 billion by 2021, according to the CBO. The bill also prevents the Department of Education from incentivizing on-time repayment of loans through programs, such as one that offers partial rebates for certain fees students incur during the loan process.

Graduate students who make payments automatically debited from their bank accounts will still receive interest rate reductions.