Yesterday President Obama signed a two-week continuing resolution that reduces current federal spending by $4 billion and effectively eliminates the Leveraging Educational Assistance Partnership (LEAP) program.

The bill does not impact the current maximum Pell Grant.

With this  final hurdle for a short-term, stopgap bill completed, Congress now will begin to negotiate another continuing resolution to provide funding for the remainder of the c urrrent fiscal year. 

Last week the U.S. House passed H.R. 1 which would reduce federal spending by $61 billion, including reductions to higher education.  The U.S. Senate however has indicated that it will not pass a budget bill containing such deep reductions.

The Senate is currently drafting its own budget bill that is likely to include approximately $25 billion in reductions mosttly from President Obama’s FY12 budget request.  It is unclear at this time whether or not the Senate version will include similar cuts to higher education, in particular reductions to the maximum Pell Grant and the elimination of funding for the Federal Supplemental Education Opportunity (FSEOG) program.

Yesterday U.S. Education Secretary Arne Duncan  presented President Obama’s FY 12 budget to members of the U.S. Senate Budget Committee.

The president’s budget would boost FY2012 discretionary spending for Pell Grants by $5.4 billion above spending levels in the FY2011 continuing resolution (CR) that is set to expire on March 4.  The increased funding would bring the total FY2012 discretionary funding for Pell to $28.6 billion.

The administration proposes reining in the cost of the Pell Grant program in FY2012 by eliminating the newly enacted “year-round” Pell Grant program that is designed to accelerate a student’s time to completion. The president’s budget would also eliminate interest subsidies for graduate student loans and direct those savings to the Pell grant program. The administration projects that its proposal — known as the Pell Grant Protection Act — would reduce the discretionary need for the Pell Grant program by $100 billion over the next 10 years. Legislative text for the Pell Grant Protection Act has yet to be released.

Senate Budget Committee Chairman Kent Conrad (D-ND) highlighted the challenge that growth of the Pell Grant program presents to Congress.

“The rising cost of college has outpaced the increases in the Pell award,” he said. “At the same time, due to the recession and increased demand for Pell grants, as well as changes that we made as to who qualifies, the cost of the program has increased. So, we’re paying a smaller share of the cost of college, but the overall cost of the Pell program has increased.”

Republicans argued that the administration’s proposal does not go far enough to rein in Pell spending.

“In 2008, we provided Pell Grants for 6 million, now we’re providing Pell Grants, under your proposal, for 9.6 million, doubling the entire budget and we don’t have the money,” said the committee’s Ranking Republican Sen. Jeff Sessions (R-AL). “You haven’t cut Pell Grants. Pell Grants are increasing dramatically.”

This morning the Senate voted – 91 to 9 – to keep the federal government operating another two weeks through March 18 and cut $4 billion from the federal budget.    

The U.S. House of Representatives passed the two-week continuing resolution (CR) yesterday.

Education programs received a disproportionate 22 percent of the cuts, but the maximum Pell Grant would remain at $5,550 under the bill.

The only student aid cut in the bill was the elimination of funding for the Leveraging Educational Assistance Partnership (LEAP) program. This cut would provide $64 million in savings.   The bill would also make cuts several cuts to unfunded earmarks proposed by President Obama in his FY 2012 budget.

 The measure now goes to President Obama, who is expected to sign it.

Over the past month Congress has taken a series of steps that would impact federal funding for higher education.

On February 19 the U.S. House passed a seven-month long continuing resolution (H.R. 1) to fund federal programs for the remainder of FY2011. H.R. 1 reduced spending by almost $60 billion compared to FY10 spending levels.  Among the reductions included in H.R. 1 are several that would reduce funding for higher education.

• Reduces discretionary-funded maximum awards for the Pell Grant from $4,860 to $4,105.  When the mandatory funds ($690) are considered the 2011-12 maximum Pell Grant award would be $4,705. This is a 15% decrease from 2010-11;
• Makes proportionate reductions to awards below the maximum;
• Reduces Pell eligibility for some of the highest eligible Expected Family Contribution groups;
• Prohibits the U.S. Department of Education from using FY11 appropriations to implement, administer, or enforce gainful employment regulations;
• Provides no funding for the Federal Supplemental Educational Opportunity Grant (FSEOG) and the Leveraging Educational Assistance Partnership (LEAP). Both programs provide financial grants to students who qualify for financial aid; and
• Reduces President Obama’s proposed FY11 budget request by $100 billion.

An unintended consequence of the reduction to the Pell Grant included in H.R. 1 is the potential for the bill to trigger a provision in last year’s student-loan-overhaul law that conditions additional support for the Pell on Congress’ maintaining a “base” maximum award of $4,860. Under the overhaul, if lawmakers reduced the base below $4,860 the Pell Grant would become ineligile for mandatory “add ons” to the maximum starting in 2014.

According to an analysis by the Center on Budget and Policy Priorities, reducing the base by $845 to $4,105 as H.R. 1 proposes would result in the loss of $870 in mandatory money in 2014. Taken together, those reductions would cut the maximum award from the current $5,550 to $4,025.

The Senate has indicated that the reductions in H.R. 1 are too deep and are expected to release their version of a spending bill this week. It is expected that the Senate version will include nearly $25  billion in reductions, most of which were proposed by the Obama administration’s FY12 budget request. 

Despite all of this Congress has only five days to agree on a FY11 spending bill before the current continuing resolution bill expires on March 4 (this Friday). 

In a move that could temporarily prevent a government shutdown, if no agreement is reached by March 4, the House Republicans have proposed a short-term extension of federal funding that would continue to fund most federal programs at current levels for an additional two weeks (until March 18). In addition the extension would trim $4 billion from the budget. 

The reductions in the short-term Republican funding bill include earmarks that Congress had already agreed not to continue and programs that the President targeted for elimination in his FY12 budget, including LEAP. 

Senate Democrats have signaled some acceptance to the short-term proposal to allow more time to negotiate out a FY10 bill.

Earlier this week, the U.S. House of Representatives voted 235 to 189 to approve a stop-gap spending bill (H.R. 1). H.R. 1  would fund the federal government for the rest of FY2011 after the current continuing resolution expires on March 4.

H.R. 1 cuts discretionary-funded maximum awards for the Pell Grant from $4,860 to $4,105.  When the mandatory funds ($690) are considered the 2011-12 maximum Pell Grant award would be $4,705. This is a 15% decrease from 2010-11.

In addition, the bill makes proportionate reductions to awards below the maximum, reduces Pell eligibility for some of the highest eligible Expected Family Contribution groups, and prohibits the U.S. Department of Education from using FY11 appropriations to implement, administer, or enforce gainful employment regulations.

The bill also provides no funding for the Federal Supplemental Educational Opportunity Grant (FSEOG) and the Leveraging Educational Assistance Partnership (LEAP). Both programs provide financial grants to students who qualify for financial aid. Finally, the bill reduces President Obama’s proposed FY11 budget request by $100 billion.

H.R. 1 now goes to the U.S. Senate for further consideration.

Yesterday, President Obama released his proposed federal budget for FY12.  The budget makes several investments in education and proposes some changes to the Pell in order to fund the grant at the current maximum level.

Higher Education Programs

The Administration’s 2012 request includes $2.3 billion for Higher Education Programs to help achieve the President’s goal of significantly increasing the percentage of Americans with postsecondary degrees or industry-recognized certificates.

A key priority for 2012 is a $150 million request for the Fund for the Improvement of Postsecondary Education (FIPSE) to support the “First in the World” competition. This proposal, which would be modeled after the i3 program for K-12 education, would provide incentives and rewards for innovation and building evidence of what works to reduce costs and improve outcomes in postsecondary education.

In addition the proposed budget would prioritize:

• A $40 million request for first-time funding for the Hawkins Centers of Excellence program to increase the talent pool of effective minority educators by expanding and reforming teacher education programs at minority-serving institutions (MSIs).
• A $484.8 million request in discretionary funding for the Aid for Institutional Development programs. The request would strengthen institutions of higher education that serve high proportions of minority and disadvantaged students, including Historically Black Colleges and Universities (HBCUs) and Historically Black Graduate Institutions (HBGIs), by improving their academic programs, institutional capacity, and student supports. The budget also provides $117.4 million for the Developing Hispanic-serving Institutions program.
• A $920.1 million request to support college preparation and completion activities for participants in the Federal TRIO Programs, as well as $323.2 million to serve an estimated 756,000 middle and high school students preparing for college through Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP).
• A $125.9 million request  for the International Education and Foreign Language Studies programs, which help meet the Nation’s security and economic needs through the development of expertise in foreign languages and area and international studies.
• A  $40.7 million request for merit- and need-based scholarships and fellowships to postsecondary students under Graduate Assistance in Areas of National Need (GAANN) programs.

Student Financial Assistance

The 2012 request would ensure that Pell Grants will be available to all eligible students through a combination of mandatory savings to offset rising Pell demand and changes in the Pell program that would reduce current and future costs. Proposed mandatory savings include the elimination of interest subsidies for graduate student loans and providing an opportunity for students with multiple loan servicers to convert their student debt to a single loan holder, while the elimination of the “two Pells” provision, which effectively made many students eligible for two Pell Grants in a single award year, would achieve significant cost savings. The 2012 request also would expand the Perkins Loans program and simplify access to student financial aid.

In addition, the 2012 budget includes a new College Completion Incentive Grants program that would make grants to States to encourage colleges to help students enroll in school and finish their studies with a degree or certificate and to reward institutions that produce successful outcomes. Finally, a new Presidential Teaching Fellows program would support K-12 education by recruiting and preparing talented students for the teaching profession through top-tier teacher preparation programs.