NAICU Washington Update

President’s FY 2019 Budget Slashes Student Aid

February 23, 2018

On February 12, President Trump submitted his FY 2019 budget to Congress, proposing massive cuts to the federal student aid programs.  If enacted, low-income students are going to have a much more difficult time affording a college education.  

Overall, the Administration’s proposal cuts $203 billion over 10 years from the student loan programs, and $1.6 billion in federal student aid in FY 2019.  These proposals are similar to last year’s budget request, which was rejected by Congress when writing spending bills.  However, it is concerning that the budget includes the notion of one grant-one loan and aid targeted at career-oriented programs that mirror congressional proposals for the reauthorization of the Higher Education Act (HEA).

Following are the details of the student aid proposals:

Pell Grants: While the budget proposes to maintain the current maximum grant of $5,920, it also proposes to use existing funds to expand eligibility for Pell Grants to students in short-term programs that lead to certification or licensure in high-need fields.  The budget does not include cost or participation estimates of this proposal.

Supplemental Educational Opportunity Grants (SEOG): The budget proposes to eliminate SEOG, a cut of $733 million, arguing the program is duplicative of Pell, and does not target aid to the neediest students.

Federal Work Study (FWS): The budget proposes to cut $490 million from FWS, leaving $500 million for a newly restructured focus on job training, not financial aid.

TRIO and GEAR UP: The budget proposes to eliminate GEAR UP funding, a cut of $340 million, but incorporate its activities into TRIO, which is level-funded at $950 million for a new state distribution formula.

Graduate Education: The budget proposes to eliminate Graduate Assistance in Areas of National Need (GAANN), a cut of $28 million, arguing it is too narrowly focused and is not a top priority.

Student Loans
  • Subsidized Loans: The budget proposes to eliminate the in-school interest on student loans taken out by low-income students.  This cuts from the program $28.5 billion over 10 years.
  • Public Service Loan Forgiveness (PSLF): The budget eliminates PSLF, arguing that the new proposed income driven repayment plan would provide sufficient forgiveness eligibility. (The budget does not eliminate teacher loan forgiveness.) This proposal cuts $46 billion over 10 years.
  • Income-Driven Repayment: The budget proposes to consolidate existing repayment plans into one income-driven repayment plan, which would be based on paying 12.5% for 15 years for undergraduate loans, and 30 years for graduate loans, with any remaining balance forgiven after that time frame.  This proposal cuts benefits by $128 billion over 10 years.
  • Institutional risk-sharing: The budget mentions support for institutional risk-sharing on loan repayment rates, but does not include any details.
Outside of student aid, the budget proposes to consolidate Title III and Title V Strengthening Institutions Grants into a state formula for minority-serving institutions; and eliminates funding for International Education and Teacher Quality Partnership Grants.

Next Steps
Congress has until March 23 to finalize the FY 2018 appropriations bills based on the newly enacted budget deal.  It is expected that after the congressional spring break, March 26-April 9, Congress will turn to the FY 2019 budget process.

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