Every year around this time, the president of the U.S.
submits a budget proposal to Congress for consideration for the next fiscal
year, which begins Oct. 1. This request, first required under the Budget and
Accounting Act of 1921, lays out the spending and revenue plans for all
federal agencies and departments, including the Department of State, Department
of Agriculture and, of course, the Department of Education.
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The proposals are analyzed by the Congressional Budget
Office and submitted to the House and Senate Budget Committee for
consideration. How receptive these committees are to the president's proposals
depends on several factors, not limited to – but certainly including – party
politics.
The Department of Education's higher education portion of
its proposed budget attempts to continue the administration's focus on
enrollment, affordability and completion. The proposal puts an extra emphasis
on completion, stating, "the Administration has doubled down on its
efforts toward a new higher education focus on degree completion, in addition
to college access and affordability, seeking to help shift incentives at every
level to focus on student success, not just on access."
While that likely sounds good, students and graduates are
probably more interested in what the proposed budget really means for them.
Here's a look at some of the Education Department's proposals, as well as their
implications.
Summer Pell Grants
The proposed budget reinstates the ability for full-time
students who have exhausted their Pell Grant eligibility for the year to
receive additional Pell funds for the summer semester.
The idea here is to offer low-income students an incentive
to complete their credentials and do so more quickly, which would
hypothetically reduce student loan debt. The proposal also wants to speed
things up by allowing an additional $300 "Pell bonus" for those
students taking at least 15 hours per semester, which is more than a full-time
course load – defined as 12 hours by federal aid policies.
Perkins Wind Down
The budget proposal alters the Perkins loan program, which
is winding down, to an unsubsidized loan program. That means the interest on
the loan would be the responsibility of the borrower and would start accruing
upon disbursement; currently, the federal government pays the interest on
Perkins loans while the borrower is in school, in a grace period or during
certain periods of payment postponement.
The new program would still be at an institution's
discretion, but would be administered at the federal level as a direct loan
program.
Easier FAFSA
The Department of Education is looking to reduce the
questions on the Free Application for Federal Student Aid. It proposes doing
this by relying primarily on tax return information and removing questions
related to assets and additional types of income, including savings and
investments.
One Income-Driven Repayment Plan
The proposed budget creates a single income-driven repayment
plan for borrowers who take their first loan on or after July 1, 2017. The plan
would be similar to the new Revised Pay As You Earn plan. Existing borrowers
would still have access to whichever repayment plans they are eligible for
today.
Greater Teacher Loan Forgiveness
The Education Department is seeking to simplify and increase
the existing teacher incentive programs by combining the current TEACH Grant
with the Teacher Loan Forgiveness benefit for a maximum forgiveness amount of
$25,000.
Borrowers who graduate from "an effective preparation
program" and who begin teaching in a low-income school starting in 2021
would potentially be eligible for this maximum amount, while others with lesser
credentials could potentially qualify for up to $10,000. The proposal also
bases forgiveness amounts on time spent teaching in these high-need areas
Capped Public Service Loan Forgiveness
The proposed budget would cap the forgiveness benefit under
Public Service Loan Forgiveness to $57,500. The reasoning for this proposal is
to protect students and taxpayers against institutional practices that may
encourage over-borrowing. The Student Loan Ranger wants to emphasize that this
is only a proposal, and if it should pass, it would not apply to existing
borrowers.
While the goal for the budget process is a budget resolution
that passes both the House and Senate, doing so is not a requirement. With an
upcoming presidential election and therefore a fairly short number of voting
days in Congress this year, the Student Loan Ranger isn't sure that completing
a budget will be a priority.
Even if it completes a budget, it's unlikely that this
Congress would prioritize any of these proposals, unless they meet certain
agendas – which most do not. In short, the Education Loans advises
readers to look at this proposed budget as more of a suggestion for future
Democratic policy proposals when Congress initiates the reauthorization of the
Higher Education Act, likely in 2017 or later.
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