NAICU Washington Update

Final Obama Budget Calls for Continuing SEOG, LEAP

May 11, 2009

President Obama submitted the long-awaited details of his FY 2010 budget to Congress on Thursday.  The fine print confirms what administration officials had been telling NAICU for months - the  president advocates continuation of both the Supplemental Educational Opportunity Grant (SEOG) and LEAP state grant programs.

While SEOG has been on and off the chopping block in recent years, it has survived with sporadic funding increases.  In contrast, LEAP has been recommended for elimination for decades, no matter which party has been in power.  Continuing the LEAP program is essential for private colleges, given that it forces state student grant programs to treat students at private non-profit colleges the same as those attending public colleges or to risk losing federal matching funds.  Both programs would receive funding only at last year's levels.  Funding for Federal Work Study was also preserved.

The budget information released on May 7 also included a few more details about the president's plan to restructure student aid.  Full legislative proposals have not been yet been drafted, however, and are being left for negotiations with Congress.  The outline of the student aid proposal was initially unveiled with the broad parameters of the FY 2010 budget in February (see earlier Washington Update).

The details now reveal that the proposal for a Pell Grant "entitlement" would be an "appropriated entitlement."  This means that the individual student would be guaranteed the grant, but the funding mechanism would be controlled by the appropriations committee with mandatory money, rather than discretionary money as it is now.  (A true entitlement, like Social Security, guarantees the individual a benefit, and draws funding directly from the Treasury.)  The maximum grant would be set at $5,550 and would increase by CPI plus 1 percent each year.

For the Access and Completion Fund, language in the budget indicates the program would include national and state activities to improve college completion, and that the administration and Congress will work together to determine the allocation between federal and state funds - rather than just send a lump sum to governors.  This is an improvement over the initial version which would have given all funding to the governors in a type of higher education block grant - an idea strongly opposed by the NAICU board at its recent spring meeting.

Details on the new Perkins Loan program show that it would be disseminated like Pell Grants and Direct Loans; would have the same loan limits as unsubsidized Stafford loans; and would be serviced by private-sector contractors.  Still included is the Perkins language about incentives for colleges to "control costs and offer need-based aid to prevent excessive indebtedness," but there are no details.  The proposal also states that "It may also reward schools that enroll and graduate students from low- and middle-income families."

NAICU is working closely with the administration and Congress on how to implement restructuring of student loans and Pell Grants.  With the Student Aid Alliance, the association continues to lobby for substantial increases in all the student aid programs.   Staff members will be talking with appropriators on Capitol Hill about plans for the FY 2010 spending bills soon, and continuing the crusade against inappropriate federal controls on college pricing and protect the fundamental right of institutions to award their own aid according to their unique missions.  

The Department of Education Budget Summary for FY 2010 is available on line.  It includes explanations of program requests, lists of programs slated for termination, and a useful appendix that includes Department facts and funding tables. 

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