Details are beginning to emerge on Obama’s proposal to make college affordable.  He spoke to this during his State of the Union address on Tuesday, and again today at an event at the University of Michigan.  US Department of Education Secretary Arne Duncan has also been talking about this issue since late last year, and often refers to the challenge as looking “beyond the iron triangle” of cost, quality, and access.

Obama is proposing a financial aid overhaul that would – for the first time – tie colleges’ eligibility for campus-based aid programs (Perkins loans, work-study, and supplemental grants for low-income students) to the institutions’ success in improving affordability and value for students.  Under the proposed plan, the amount available for Perkins loans would grow to $8 billion, from the current $1 billion. Obama also wants to create a $1 billion grant competition, along the lines of the Race for the Top program for elementary and secondary education, to reward states that take action to keep college costs down.  Finally, he has also proposed a separate $55 million competition for individual colleges to increase their value and efficiency.

The administration also wants to give families clearer information about costs and quality, by requiring colleges and universities to offer a “shopping sheet” that would make it easier to compare financial aid packages and post-graduate earnings and employment information – all in an attempt to give students and families a better sense of what to expect from the college and after graduation. This would be in addition to the requirement imposed this year on the “college cost calculator.”

These proposed changes would all require Congressional approval, which is not likely to happen this year.  While some legislation may get introduced, most of the discussion around these ideas will take place out on the campaign trail.  Hang on for a bumpy ride!

Read more about the State of the Union address. 

Read more about the President’s speech at University of Michigan. 

Read more about Secretary Duncan’s “Beyond the Iron Triangle” speech.

President Obama announced today at a speech at the University of Colorado Denver, a new initiative called ‘Know Before You Owe’ designed to make college loans more affordable and reduce the financial burden on recent graduates – many of whom are struggling to find employment.

The administration is essentially speeding up by 2 years, a federal law that was set to go into effect in 2014. Announced today and beginning in January of 2012, students with federal loans who enroll in the Income Based Repayment Plan will experience a cap on their federal student loan repayments at 10% (currently 15%) of discretionary income and all remaining debt on these federal loans will be forgiven after 20 years (currently 25 years).

The second part of the initiative encourages students with one or more types of federal loans to consolidate them for a 0.5% interest rate reduction.

The administration estimates that this could affect up to 1.6 million borrowers and save some students hundreds of dollars a month.

The House Appropriations Committee released their draft Labor-HHS-Education spending bill today in which they executed several spending cuts and revoked all additional funding for “Obamacare”. Some highlights:

Health & Human Services

• The Health Resources and Services Administration (HRSA) is funded at $6.7 billion, a $1.5 billion increase over FY11 levels
• The National Institutes of Health (NIH) is funded at $31.76 billion, which is $1.4 billion above FY11 and designed to support at least 9,150 new and competing research projects
• Head Start would receive $8.09 billion, approximately $500 million above FY11
• The Center for Medicare/Medicaid Services takes a cut of $290 million from FY11 with an FY12 funding level of $3.2 billion

Education

• Investing in Innovation (i3) funding is eliminated by the House in their FY12 bill
• International Education & Foreign Language (Title VI) is cut by approximately $10 million to $66.7 million from already reduced FY11 levels
• Federal Work Study is level funded at $978.5 million
• TRIO is level funded at $826.5 million
• GEAR UP is level funded at $302.8 million
• the Fund for the Improvement of Post-secondary Education (FIPSE) is eliminated by the House for FY12
• The Pell Grant Program is maintained at a maximum award amount of $5,550 but in order to fill the shortfall in the program, the Committee suggests limiting lifetime eligibility to 6yrs (from 9yrs), rolling back recent changes to the qualification formula, and eliminating eligibility for students who attend school less than half time or students who do not have a diploma/GED

The Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies held a hearing yesterday on the Department of Education’s FY12 budget. Secretary Duncan was the witness.

In his opening remarks, Duncan expressed concern that America has gone from being a world leader in education to now being “middle of the pack”.  He also emphasized that demand on the Pell program has increased from 6 million to 9 million students in 2 years and that the Department is focused on closing the Pell shortfall – currently $11 billion – through increased efficiencies and more resources. The Pell program accounts for a third of the Department’s total $77 billion FY12 request. The Secretary cites the increasing number of lower income families and more families without jobs as the reason for the increased demand for the grants. Earlier this week, both Reid’s and Boehner’s debt ceiling deals contained an elimination of the in-school interest subsidy for graduate students, with the money saved by doing this going back into the Pell program to help shore up the shortfall for the next two years. Although this will have a negative effect on students, out of the many rumored changes to Pell that have been floating around during the past few weeks and the negotiation process, this is the best possible outcome for the university community. Pell and changes to the program will continue to be an issue as we head towards Fall and finishing up the FY12 process.

The Committee also brought up the concern that 89% of first-generation college students do not complete their degree. The Secretary stated that this was one of the Department’s FY12 priorities, and they are trying to solve this problem in three ways: 1) Fighting to maintain access to Pell. 2) Investing in community colleges and partnerships with the private sector to leverage funding. 3)  Investing in programs such as i3 and the proposed “First in the World Competition”. The First in the World Competition would provide “venture capital” to encourage innovation approaches to improving college completion (particularly low-income and minority students), research support to build the evidence of effectiveness needed to identify successful strategies, and resources to scale up and disseminate strategies we already know are successful.

The Labor-HHS-Ed Appropriations bills have not yet been drafted in the House or the Senate and we don’t expect to see them until after the August recess.

The Department of Education has released the following summary of the President’s FY12 budget request for the agency:

U.S. Department of Education

Information Release

2/14/11

Deep cuts and efficiencies in several key education programs will help fund new education investments to keep American students competitive in the global economy under the proposed 2012 Obama administration education budget. The President released the budget at a Baltimore public school on Monday, February 14.

“We are cutting where we can to invest where we must,” said Education Secretary Arne Duncan, who joined President Obama for the announcement. “These are challenging times, but we can’t delay investments that will secure our future. We must educate our way to a better economy by investing responsibly, advancing reform and demanding results.”

Areas for new investment run the spectrum from early learning to college completion, and include funding for formula and competitive K-12 programs, including a new district-level Race to the Top program with a rural set-aside and another round of Investing in Innovation grants. The budget also includes new and expanded programs that support teacher and principal effectiveness. Read more

Today, President Obama released a $3.73 trillion budget request for FY12. The White House estimates that the request and projections for spending in the out-years would reduce the deficit by more than $1 trillion over the next decade. Despite reductions in overall spending, the request contains significant increases for research and development as well as some education programs.

National Institutes of Health- $31.8 billion, an increase of 3.3% over the FY10 level of $30.8 billion

White House/Office of Management and Budget HHS FY12 Budget Summary

National Science Foundation- $7.77 billion, an increase of 13% over the FY10 level of $6.87 billion –keeping the agency on track for a 10-year (FY08-FY17) doubling that is authorized in last year’s America COMPETES Act

NSF FY12 Budget Materials

Department of Energy, Office of Science- $5.4 billion, an increase of 10.2% over the FY10 level of $4.9 billion –keeping the agency on track for a 10-year (FY08-FY17) doubling that is authorized in last year’s America COMPETES Act. $550 million is also included for the Advanced Research Projects Agency-Energy (ARPA-E) to continue support for the promising early-stage research projects that could deliver game-changing clean energy technologies.

DoE FY12 Budget Materials

Department of Defense, Science and Technology- $12.2 billion for science and technology programs, which includes a 2% real growth in basic research

National Oceanic and Atmospheric Agency- $5.5 billion, an increase of 14.3% over the FY10 level of $4.85 billion

White House/Office of Management and Budget Department of Commerce FY12 Budget Summary

Department of Education-

• Continues support for a $5,550 maximum Pell Grant award, $819 above the level in 2008, largely paid for by eliminating the year-round Pell Grant and the in-school interest subsidy for graduate and professional student loans
• Invests $26.8 billion, an increase of 6.9 percent, in a reformed Elementary and Secondary Education Act (ESEA) focused on raising standards, encouraging innovation, and rewarding success, while allowing States and districts more flexibility to invest resources where they will have the greatest impact. The new ESEA directs funds to reform-oriented competitive initiatives, consolidates dozens of programs, and cuts programs that do not demand results.
• Provides $1.4 billion for new competitions, modeled on the Race to the Top initiative, to strengthen and reform early childhood education, improve district performance in elementary and secondary education, and improve outcomes in higher education

Department of Education FY12 Budget Materials

National Endowment for the Humanities- $146 million, a decrease of 13% from the FY10 level of $168 million

NEH FY12 Budget Summary

Additional information on President Obama’s FY12 budget request will be posted as it becomes available. The release of the President’s Budget Request (PBR) is the first step in appropriations process for the coming year. After Congress and the President settle on a path forward for FY11 — which began on October 1, 2010 — the FY12 process will begin to move forward.

The leadership of the House of Representatives has come forward with a second version of proposed cuts for fiscal year 2011. The new continuing resolution (CR) proposal is in response to criticism from deficit hawks within the Republican caucus who seek to fulfill a 2010 promise to reduce federal spending by $100 billion from what the President has put forward. The proposed CR cuts would be particularly significant, given that they would be spread over the remaining 7 months of FY11 as opposed to over an entire fiscal year. The House proposal cuts nearly all federal research agencies including: NIH, NSF, and DoE Office of Science. Additionally, Pell Grant levels would see a reduction of approximately 15%.

Details on select agencies/programs within House FY11 proposal:

National Institutes of Health- NIH would be cut by $1.63 billion, or 5.3%, below the FY10 level of $31.01 billion.

National Science Foundation-  NSF would be cut by $359.5 million, or 5.2%, below the FY10 level of $6.87 billion.  The proposal appropriates $5.4 billion for Research and Related Activities, which is $150 million, or 2.7%, below the FY 10 level.  For Education and Human Resources, the bill appropriates $725.7 million, which is $147 million, or 16.4%, below the FY 10 funding level.  For Major Research Equipment and Facilities Construction (MREFC), the CR appropriates $54 million, which is $63 million, or 53%, below the FY10 level. The MREFC account funds the Ocean Observatories Initiative (OOI) that UW partners on. OOI represents the largest single federal award to the UW.

Department of Energy-  DOE’s Office of Science would be funded at $4.02 billion, representing a cut of $886 million, or 18%, from the FY10 funding level of $4.90 billion. $50 million is included to sustain the new Advanced Research Projects Agency -Energy.

National Institute of Standards and Technology-  NIST would see a reduction in its overall budget of $159.5 million, or 19%, from its FY 2010 funding level of $856.6 million. The university facilities construction account within NIST is eliminated.

National Aeronautics and Space Administration-  NASA would be cut by $578.7 million, or 3.1%, below the FY10 amount of $18.7 billion.  However, NASA Science would receive $4.4 billion, Aeronautics $501 million, and Education $182 million – all the same as FY10. 

Department of Education-  Funding is not included in the House proposal to fill the Pell Grant shortfall, which means a cut of $845 from the discretionary maximum grant of $4,860 down to $4,015. With the mandatory funding, the maximum grant would total $4,705, compared to the current maximum grant for the academic year 2011-12 of $5,550. The proposal cuts funding for TRIO and GEAR UP by $24.9 million and $19.8 million, respectively, to below their FY08 levels. In addition, the Federal Supplemental Educational Opportunity Grant (FSEOG) program for undergraduates with exceptional financial need was proposed for elimination, as was the Leveraging Educational Assistance Partnership (LEAP) Program that establishes a federal-state partnership to provide financial assistance in the form of grants to students who have demonstrated financial need.

National Endowment for the Humanities- NEH would be cut by $22 million, from its FY10 level of $167 million to $145 million, a reduction of 13.2%.

A vigorous defense of investments in these programs is taking place in Washington, DC. The Senate and President are expected to challenge the House proposal. Meanwhile, today, President Obama released his FY12 budget request. Although the request makes cuts to federal spending, increases to several research agencies are included within the proposal as well as well as a reorganization of the Pell Grant program that would keep the current maximum award level of $5,550. The President’s budget request largely assumes level funding for FY11, which at this juncture, is probably a best case scenario. Additional details on the FY12 budget request will be provided shortly.

The U.S. Department of Education has determined that it can establish the Pell Grant maximum for the 2011-12 academic year at $5,550 based on the Dec. 22, 2010, Continuing Resolution (CR) that expires on March 4. The agency plans to issue the 2011-12 Pell Grant Payment and Disbursement Schedules using the $5,550 maximum Pell (same level as current year) by February 1. If Congress extends the current CR without altering spending levels, the maximum Pell award would be $5,550 and the Pell Schedules issued before Feb. 1 would stand. If Congress alters Pell spending after the current CR expires, the maximum Pell award could change and Pell Schedules could need to be revised.

Senator Lamar Alexander (R-TN) (former Secretary of Education under President George H.W. Bush) is quoted in today’s Congressional Quarterly as stating that cuts to the Pell Grant program, along with the rest of the domestic discretionary budget, are on the table as Congress now attempts to reduce spending through the FY11 and FY12 appropriations processes.

In December 2010, the former Congress passed a temporary spending measure intended to keep the government running while lawmakers try to agree on a permanent budget for the current fiscal year. The spending measure included $5.7 billion to plug a deficit in the Pell program, created by expanded student eligibility. The funding seemingly stabilized Pell for the coming 2011-12 academic year. However, Congress can undo much of that as they finalize fiscal year 2011 appropriations. Support for Pell will be at the forefront of UW advocacy efforts in the coming weeks.

On Friday Congress passed an altered version of the existing Post 9/11 GI Bill, which is designed to address issues that arose with the previous legislation. The updated bill will:

 -  provide full tuition for those attending a public school in their home state and up to $17,500 in tuition payments for those attending private schools (this number will rise annually, based on the avg. cost of tuition).

- allow funds to be used for vocational schools, distance education programs, and on-the-job training

- cover 90,000 National Guardsmen and Reserves who were previously ineligible to apply for the benefit.

- Ensure that students who are taking classes online will be awarded a portion of the housing stipend, which can total more than $2000/month

-  Allow a 10 year restriction for taking advantage of the benefit may be waived for spouses and dependents if they had to delay attending college in order to take care of a wounded service member

These changes will take affect in August and the VA is working to get their payment process streamlined by then to avoid any delay of these tuition payments – a problem that arose with the passage of the original legislation.

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