House Education Funding Bill Offers Mixed Results

The House Appropriations Committee approved the FY 2027 Labor-HHS-Education Appropriations bill, which maintains funding for student aid and higher education programs largely at current levels while eliminating subsidized undergraduate loans to address the Pell Grant funding shortfall. The bill also rejects President Trump’s proposed cuts to student aid and higher education funding.

Below is a summary of the proposed funding levels, plans for addressing the Pell shortfall, and the House oversight of the Department of Education related to the implementation of recent legislation and distribution of funds. 

Funding Levels

Overall, the bill reduces Department of Education funding by $8.1 billion from the prior year, bringing total funding to $70.7 billion. Within that reduced topline, however, the measure prioritizes federal student aid and higher education programs relative to both the president’s budget proposal and previous House funding bills.

The House bill increases the maximum Pell Grant by $50 to $7,445, increases overall funding for the TRIO and GEAR UP programs by $6 million each, and maintains funding for all Titles III and V Strengthening Institutions programs. The bill funds all minority-serving institutions, including modest increases for some programs, reversing the Department’s FY 2025 decision to eliminate and redirect those funds.

On the downside, the House bill proposes to decrease funding for Supplemental Educational Opportunity Grants (SEOG), to $546 million, and Federal Work-Study (FWS), to $908 million. While disappointing, the proposed cuts to FWS and SEOG are far less drastic than those proposed in last year’s House Appropriations bill, which would have eliminated funding for these important campus-based aid programs. Committee Report language notes, however, that the committee is concerned that the statutory formula for these programs does not always allocate funds to institutions with the highest shares of low-income students. 

While the bill generally includes fewer program eliminations in student aid and higher education than in past years it proposes no funding for Teacher Quality Partnership grants, Title VI International Education, and Graduate Assistance in Areas of National Need. The committee deems these programs duplicative of other more targeted existing federal programs.

Pell Grant Shortfall 

One of the key provisions that must be addressed in this bill is paying for the funding shortfall in the Pell Grant program. In addition to appropriating funds to cover the baseline costs for Pell, the program has a cumulative funding shortfall of roughly $15 billion, which the Appropriations Committee is required to pay for by budget rules. If funds are not provided, the committee must either reduce the maximum grant or restrict eligibility to meet the amount of funding available for the program. The current shortfall is a result of the implementation of the FAFSA Simplification Act of 2020, which resulted in increased Pell eligibility, as the law intended. 

To cover the shortfall, the bill proposes to eliminate the in-school interest subsidy for undergraduate student loans and redirects the roughly $20 billion in savings from terminating subsidized loans to pay for the Pell program. If enacted, the elimination of the in-school interest subsidy would make loans more expensive for the same low- and middle-income students who qualify for Pell Grants. During the markup, Rep. Madeline Dean (D-PA) offered an amendment to strike out the provision to eliminate subsidized loans, but it was rejected.  

Checking the Department

The Appropriations Committee seeks to provide enhanced oversight of the Department on its implementation of recent legislation and distribution of funds by including legislative language and report language accompanying the bill. Of note is the inclusion of legislative language that: 1) blocks the Department from implementing the cap on graduate borrowing for nursing students; 2) ensures TRIO grants are awarded based on the legislative purpose rather than new administrative priorities related to workforce development; and 3) recognizes the importance of Hispanic Serving Institutions, other minority-serving institutions, and rural-serving institutions, and urges the Department to fund them. The committee also encourages the Department to continue to evaluate the impact of Department of Justice guidance and legal opinion about the constitutionality of minority-serving institutions when making awards.

Next Steps

The next step for the House bill is floor consideration, which has not been scheduled. It is unclear if House leadership will consider spending bills before the beginning of the fiscal year on October 1, or if final decisions will be made after the mid-term elections. 

The Senate Appropriations Committee leadership has cancelled recently scheduled subcommittee markups because they cannot agree to topline spending totals for their work on FY 2027.  They are at odds over the split between defense and non-defense spending allocations. between defense and non-defense spending allocations.

For more information, please contact:
Stephanie T. Giesecke