NAICU Washington Update

Trump Budget Would Significantly Cut Student Aid Programs

March 24, 2017

President Trump sent his first pass at the FY 2018 budget to Congress outlining roughly $6 billion in cuts to the core student aid programs. The proposed cuts include:

  • Elimination of funding for Supplemental Educational Opportunity Grants (SEOG), which provide up to $4,000 in additional grant aid for Pell Grant recipients;
  • Significant cuts (perhaps has much as half of the funding) to Federal Work Study, which provides, on average, $1,600 in work-based aid;
  • $200 million from TRIO and GEAR UP, which help students prepare for college and receive support throughout college to persist to completion; and
  • $4 billion from Pell Grant program funding. 

In addition to the proposed cuts to student aid, the budget slashes many other programs important to higher education, including: the elimination of the National Endowment for the Arts, the National Endowment for the Humanities, and the Corporation for National and Community Service; the elimination of, or cuts to, Teacher Quality Partnership grants, international education and graduate education programs; a $6 billion cut to the National Institutes of Health; and at least a 20 percent cut across other agencies with research programs involving higher education. 

The so-called “skinny budget” only includes big picture funding requests for the appropriated agencies.  Overall, the budget proposes to cut $54 billion from domestic programs to increase defense spending to $603 billion. Line item details and proposals for entitlement programs, including proposals on student loans, will be submitted to Congress later in May.

Adding Insult to Injury – More Cuts Proposed for Current Fiscal Year

Shortly after the budget proposal was released, it was determined that the Trump Administration was looking to cut an additional $3 billion in education funding for the remainder of the fiscal year.  Included in these cuts is $1.3 billion to the Pell Grant surplus – on top of the $3.9 billion proposed for next year – and $1.2 billion for the National Institutes of Health.  These proposed cuts for the current fiscal year, which is operating under a Continuing Resolution through April 28, were identified in a document obtained by Politico

Budget Outlook

The lopsided budget proposal from the administration puts the Republican majority in Congress in a difficult position procedurally and philosophically. Some members will want to support the president’s proposed transfer of funds from domestic to defense programs.  But procedurally, Congress is bound by the statutory spending caps, and would have to pass major budget process legislation to break those caps.  

Philosophically, some members support education and other domestic programs slated for cuts in the president’s budget. In education, there has been historical bipartisan support for funding the student aid programs.  In response to the proposed cuts, many senior Republican appropriators have politely dismissed the president’s spending proposal citing “Congress has the power of the purse” to make spending decisions. 

While the timing of the budget submissions is typical for the first year of a new administration, Congress is still dealing with budget issues left over from the last Congress.  The government is currently running on a continuing resolution (CR) at FY 2016 funding levels because the FY 2017 appropriations bills weren’t finalized after the November elections.  Appropriators have until April 28 to decide whether to pass agency spending bills, pass another CR through September 30, or endure a government shutdown. At the same time, the Appropriations Committees are holding hearings on FY 2018 funding requests, asking Members of Congress for their priorities, and looking towards writing bills starting May 15 (the statutory date that allows them to start action without a budget resolution). 

The Student Aid Alliance, which NAICU co-chairs, submitted its FY 2018 request and written testimony to the Appropriations Committees highlighting the need for increased funding for the student aid programs. 

Meanwhile, the budget committees are in the thick of the “repeal and replace” of the Affordable Care Act, under FY 2017 budget rules, and have indicated they will wait for the administration’s full budget submission before writing the FY 2018 budget resolution.  What the administration proposes for entitlement programs will be a critical element in what Congress decides to do with student loans.  

Recent budget plans from House Republicans proposed eliminating major elements of the mandatory funding for the Pell Grant maximum and restructuring student loans, including eliminating subsidized loans and grad-PLUS. It is possible these proposals could reemerge this year, as the Director of the Office of Management and Budget (OMB) Mick Mulvaney, was a fiscal conservative during his tenure as a Republican member of the House.  If student loans are targeted through the budget reconciliation process, the education committees will get involved, which will put pressure on them to write a Higher Education Act reauthorization. 

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