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Clinton Budget Called a "Mixed Blessing" for Private Colleges and Universities

February 2, 1999

FY 2000 Budget Offers Little Support for Proven Student Financial Aid Programs; Extends Education Tax Benefits

WASHINGTON, D.C. - David L. Warren, president of the National Association of Independent Colleges and Universities (NAICU), today called President Clinton's FY 2000 budget a mixed blessing for students at private colleges and universities and their families.

"Although student aid programs received modest increases or no cuts, we are disappointed that despite a budget surplus of more than $100 billion, the president did not find the resources to fully fund these proven programs," Warren said. "For a generation, these core programs have helped millions of students attend the college of their choice. We urge the administration to make a strong statement in favor of students and families by not only expanding education tax benefits, but renewing its commitment to student aid funding."

Student Aid
Congress has done its best to increase funding for the core student aid programs during the last few years. Last year support for the existing student aid programs was reaffirmed through the reauthorization of the Higher Education Act. NAICU has called on the Clinton administration and Congress to fully fund these proven programs Student Equal Opportunity Grants (SEOG), Perkins Loans, Leveraging Educational Assistance Partnerships (LEAP), Pell Grants, and TRIO and graduate programs so that they can continue to serve needy students effectively.

However, the president's budget only provides level funding or small increases for these programs. NAICU calls on Congress and the administration to not only maintain the proven structure of these programs, but to ensure their vitality by increasing current funding by $1.5 billion.

"Despite recent funding increases, federal support for the core student aid programs has not kept up with inflation for nearly 20 years," Warren said. "In constant dollars, the maximum Pell Grant has declined 14 percent, and campus-based aid programs have declined 33 percent. Along with loans, these programs are at the heart of the federal government's student aid program. Before funding new initiatives, the administration must recommit itself to protecting and nurturing the programs that are of proven value to needy college and university students."

Tax Policy
The president's budget follows up on the Taxpayer Relief Act of 1997 by extending several key education tax benefits.

• Extends the tax-free treatment of employer-provided educational assistance for both graduate and undergraduate courses (Section 127 of the tax code) for 18 months
• Removes the restriction that allowed the student loan deduction to be claimed only during the first 60 months of a loan's repayment period
• Exempts the balance of income-contingent Direct Loans from tax after the loan is forgiven

"We appreciate the support Congress has given to education tax relief in recent years. We believe the president's budget is a further step in the right direction," Warren said. "We call on Congress to work with the administration this year to fully fund student aid, and to expand these and other important tax relief initiatives."

Contact

• Tony Pals
  (202) 785-8866
  tony@naicu.edu