Tag Archives: federal

Obama’s Plan Would Provide $30 billion for Education

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Today President Obama sent the American Jobs Act  to Congress.

The Act, unveiled last week, is focused on stimulating job growth and the economy. The $450 billion plan- to be paid for through spending cuts identified by the bipartisan deficit-reduction committee which met for the first time last week – includes a variety of efforts ranging from an extension and expansion of the cut in payroll taxes;  an overhaul of unemployment insurance, and aid to states to prevent the layoffs of 280,000 teachers while supporting the hiring of tens of thousands more.

Among the areas for investment, the President proposes $30 billion to repair and modernize buildings at elementary and secondary schools and also community college campuses.

Of the $30 billion, $5 billion is earmarked to build and renovate facilities and other infrastructure at community and tribal colleges. According to the White House the funds would bolster college “infrastructure in this time of need while ensuring their ability to serve future generations of students and communities”.

Twitter Town Hall with U.S. Education Secretary Duncan

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On August 24, at 1:30 p.m. Eastern Time, Secretary Duncan will participate in the first-ever #AskArne Twitter Town Hall. 

Veteran education journalist John Merrow will moderate the event, which will also be broadcast live on the Department’s USTREAM channel at http://www.ustream.tv/channel/education-department. 

Twitter users can submit questions to the Secretary using the hashtag #AskArne.

Washington’s Senator Murray Chosen to Lead Debt Reduction Committee

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Yesterday, U.S. Senate Majority Leader Harry Reid announced that Washington’s Senator Patty Murray will co-chair the new Joint Select Committee on Deficit Reduction.

The Joint Select Committee on Deficit Reduction is a bipartisan, 12-member panel created by the deal struck by President Obama and Congressional leaders in late July 2011 to allow the government to raise the federal debt ceiling.

Reid also appointed two other Democratic senators, Max Baucus of Montana and John Kerry of Massachusetts, to the panel.

Baucus is chairman of the Finance Committee, which has authority over Medicare, Medicaid and taxes and Kerry is chairman of the Foreign Relations Committee.

The U.S. Senate Republicans and the U.S. House Democrats and Republicans have yet to name their representatives to the Committee.

Debt-Ceiling Deal Appears to Be Reached; Impact on Higher Education

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Late Sunday congressional leaders appeared to have reached a deal to increase the nation’s debt ceiling. Though the impacts to higher education may not be the worst-case scenarios feared among advocates, as details come clear it is apparent that the plan leaves much long-term uncertainty for higher education.

Impacts to Financial Aid

In a fact sheet provided by the White House, funding for Pell Grants was protected. The plan “provides specific protection in the discretionary budget to ensure that there will be sufficient funding for the President’s historic investment in Pell Grants without undermining other critical investments.” Prior plans from both the Senate and the House would have directly appropriated funding for the Pell Grants in FY 12 and 13.

Despite the preservation of the Pell Grant, the deal does reduce some higher education benefits. Among the changes is the elimination of the interest subsidy for graduate student loans and the elimination of repayment incentives for federal student loans.

The Plan- Impact to Higher Education

The plan gives President Obama the authority to increase the debt limit by at least $2.1 trillion. The plan immediately enacts discretionary spending caps for 10-years for nearly $1 trillion in deficit reduction to be balanced between defense and non-defense spending. 

In addition a bipartisan committee is established to identify an additional $1.5 trillion in deficit reduction. The Committee is required to put their recommendations into legislation by November 23, 2011 and Congress is required to vote on the recommendations by December 23, 2011.  If the Committee fails an enforcement mechanism will trigger spending reductions beginning in 2013  to be a fifty-fifty split between domestic (i.e. discretionary spending and some entitlement programs) and defense spending. Social security, medicare beneficiaries, and low-income programs are protected from further reductions.

It still remains unclear exactly what discretionary spending would fall under the reductions if the enforcement mechanism is used.  Further discretionary reductions could impact several key higher education programs, including Perkins Loans, the Supplemental Educational Opportunity Grant and TRIO programs. As the details come to light, what is known is that higher education will be competing for a slice of an increasingly smaller federal pie.

Debt Ceiling Plans Would Impact Higher Education

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Over the last few days the U.S. House and Senate have each released separate proposals to raise the national debt ceiling. Both proposals include impacts to higher education.

Financial Aid

An analysis by the National Association of Student Financial Aid Administrators shows many similarities between the House and Senate proposals as they relate to student financial aid.

Both plans provide additional mandatory funding for the Pell Grant program for FY12 and FY13.  Senator Reid’s plan proposes $10.5 billion in FY12 and $7.5 billion in FY13 and Representative Boehner’s plan identifies $9 billion in FY12 and $8 billion in FY13.

In addition both plans eliminate the graduate student Stafford Loan interest subsidy. The savings from this are applied to the Pell Grant. The impact of this falls on graduate and professional students in programs beginning on or after July 1, 2012 who will not be able to receive a subsidized Federal Direct Stafford Loan. A subsidized stafford loan does not accrue interest as long as a student is in school at least half time, or during any future deferment periods.

The one major difference between the two proposals is the inclusion of language in the House proposal to eliminate the Direct Loan Repayment Incentives, including the Interest Rate Reduction for Electronic Debit Account Repayment and Up-Front Interest Rebate.

Federal Appropriations

Both the House and Senate proposals would establish caps on annual appropriations for the next 10 years. In addition both proposals would include enforcement rules with regard to these caps.  Identified as “sequestration” the caps would be enforced by across-the-board spending cuts.  In other words if the caps are exceeded then Congress would imlement across-the-board spending cuts in the area in which the cap was exceeded. The caps are divided between defense and non-defense spending.

The proposed caps in each proposal are similar.

 Debt Ceiling Proposal Caps, Discretionary Spending 
($ in billions)
  2012 2013 2014 2015 2016
Sen. Reid 1.045 1.047 1.068 1.089 1.111
Rep. Boehner 1.043 1.047 1.066 1.086 1.107

Both of these elements would squeeze education funding over the next decade as nearly all federal education programs are funded through the annual appropriation process. Though, as noted above, both proposals take steps to fund the Pell Grant program and mitigate the squeeze that appropriation caps would have on the program these efforts are only for a two-year period.

What’s Next

As August 2 looms both the U.S. House and Senate are moving forward with their proposals, though it is expected that no real movement will occur until a compromise is agreed upon. If Congress is unable to reach an agreement by August 2 there is speculation that a short-term debt ceiling increase will be passed.

Federal Budget for Education Takes Some Shape

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Last week, the U.S. House Appropriations Committee Chairman, Hal Rogers (R-KY), announced both the FY12 allocations for each of the 12 appropriations subcommittees, also known as the 302(b) allocations, and provided a tentative timeline for completing each bill. 
The allocations released would provide $139.218 billion to the Labor, HHS, and Education Subcommittee.  The allocation for the Labor, HHS, and Education Subcommittee is over $18 billion less than the recently agreed to FY11 level and more than $40 billion below the President’s FY12 budget request. 
The reductions in funding from the prior fiscal year and also from the President’s proposed FY12 budget are raising some concerns in higher education.  Advocates are concerned that the the funding level raises significant concerns regarding the ability to adequately fund NIH and the Pell Grant Program. 
Chairman Rogers stated that completion of work on the 12 fiscal year 2012 Appropriations bills should be finished by the end of the fiscal year on September 30th. This plan includes marking up and approving each bill at both the Subcommittee and Full Committee levels in the next few months before the August recess.
 

U.S. House Passes FY12 Budget Resolution

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Today the U.S. House of Representatives passed a proposed FY2012 resolution with a vote of 235-193.

The budget would  impact higher education in several ways.

  • Rolls back  the 2012-13 maximum Pell Grant to FY2008 levels, resulting in a maximum Pell Grant of $2,090 for the 2012-13 academic year.
  • Calls for the repeal and defunding of the Healthcare and Education Reconciliation Act (HCERA), which includes mandatory funding for the Pell Grant program. This could further lower the maximum grant by $690. 
  • Changes to limit the lifetime limits of the Pell Grant program
  • Rescinds recent expansions to the Need Analysis formula
  • Eliminates administrative cost allowances to schools
  • Repeals the expansion of income-based repayment provisions in the Student Aid and Fiscal Responsibility Act (SAFRA), and 
  • Eliminates interest subsidies on all Stafford Loans.

The budget resolution is a nonbinding resolution that sets broad spending levels that appropriations’ committees use to set specific spending levels for federal programs. In addition, it is unlikely that the Democratic-controlled Senate will approve the measure.

The U.S. House Democrats offered a substitute FY2012 budget resolution that was defeated by the House. The Democrats’ substitute proposed using mandatory spending to maintain the maximum Pell Grant at $5,550 and to pay for this by reducing spending on other programs. The substitute resolution also established a deficit neutral reserve fund for college affordability’ to allow the House Budget Committee Chairman to revise the allocations, aggregates, and other appropriate levels in the resolution for legislation that makes college more affordable, including efforts to maintain the maximum Pell grant award, as long as it does not increase the deficit.

Congress Passes FY 11 Spending Bill

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Yesterday the U.S. Senate and House passed a long-term continuing resolution that will fund the federal government through the end of the current fiscal year. The House passed the resolution with a vote of 260-167 and the Senate passed the same legislation with a vote of 81-19.

The resolution prevented a shut-down of the federal government last week. Congress had previously passed a series of short-term resolutions in lieu of a consensus on a final spending package. The most recent short-term continuing resolution expired today.

The resolution will preserve the $5,550 maximum Pell Grant for the 2011-12 award year and delay elimination of second Pell awards until after this summer. The reductions in the resolution also affect others student financial aid programs, including the Federal Supplemental Educational Opportunity Grant (FSEOG) and federal work study for the 2011-12 academic year. 

Overall the resolution reduces state spending by $38.5 million from non-defense, discretionary FY10 spending levels.  The President is expected to sign the bill.

Federal Funding Legislation for Current Year Would Impact Higher Education

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Last Friday the U.S. House and Senate along with the White House agreed to a long-term continuing resolution that would fund the federal government for the remainder of FY 2011.  The deal reduces federal spending by $38.8 billion.

Congress also passed a short-term budget gap bill that expires this Thursday which will allow for time to develop the full legislation needed to implement the agreement. The short-term budget gap bills includes $2 billion in reductions.

The budget deal preserves the maximum Pell Grant but ends year-round Pell grants (See summaries posted by the House and Senate Appropriations Committees). In addition, the budget makes reductions to several research and education programs.   The bill would eliminate the Byrd Honors Scholarship Program and the Leveraging Educational Assistance Partnership (LEAP) program and reduce funding for several programs without completely eliminating them. These cuts include:

  • $20 million cut from the Federal Supplemental Education Opportunity Grants (SEOG)
  • $25 million cut from the Federal TRIO Programs
  • $20 million cut from the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP)

The summary posted by the House Appropriations Committee also indicates a 0.2% across-the-board cut for all federal programs. It remains unclear exactly how this across-the-board cut will affect federal student aid programs.

Overall, the bill cuts federal spending by nearly $40 billion, the largest cut to federal spending in a single year. It cuts a host of education programs including Teach for America, Even Start, and Education Technology State Grants, as well as other federal programs including emergency first responders, the National Endowment for the Arts and high-speed rail. Cuts to ED programs were relatively small compared to cuts to the Departments of Transportation, Housing and Urban Development, Commerce, Justice, Labor and Health and Human Services.

Congress is expected to vote on the bill as early as Thursday.