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Category: Student Aid

Additional Glimpses Into Obama Budget Request

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Despite President Obama’s plan to call for a three year freeze of domestic discretionary spending, K-12 and certain higher education student aid/support services grant programs stand to receive significant increases in the FY11 budget process -according to administration officials. As mentioned in yesterday’s (1/26) post, certain federal programs may be cut, consolidated, or eliminated to achieve the President’s increases for education while maintaining an overall freeze on federal spending.

During the State of the Union address tonight, President Obama is expected to reiterate his support for the Student Aid and Fiscal Responsibility Act (SAFRA) that passed the House of Representatives last September but has been delayed in the Senate -pending passage of health care reform. SAFRA would eliminate banks from federal student loan programs, yielding roughly $80 billion in savings that would be spent to increase the mandatory funds available for Pell grants as well as to fund certain college access and completion grant programs.

At the K-12 level, President Obama is expected to propose an allocation of $1.35 billion for the Race to the Top program, which funds state education innovations and reforms. Additionally, $1 billion would be set aside to fund an overhaul of No Child Left Behind. Additional details will be provided in the State of the Union this evening, with a full blueprint available when the FY11 budget request is released on February 1st. The Office of Federal Relations will provide additional information as it becomes available.

Secretary of Educations Pens Op-Ed on Student Loan Overhaul

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Yesterday, The Wall Street Journal, published an op-ed by U.S. Secretary of Education Arne Duncan. In the piece, Secretary Duncan makes the case that banks don’t belong in the federal student loan business and that the subsidies they currently receive through Federal Family Education Loan program would be better spent on student aid. The Senate is expected to act on the legislation when it returns in the new year.

The Wall Street Journal Op-Ed: Banks Don’t Belong in the Student Loan Business

House Passes Jobs Bill with Higher Ed. Provisions

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Yesterday, the House of Representatives passed a jobs package (H.R. 2847 -Jobs for Mainstreet Act of 2010) that provides $75 billion of unspent funds from the Troubled Asset Relief Program (TARP) for assistance to states and local governments in avoiding government layoffs and supporting infrastructure repair and modernization. 

Of note to the higher education community in the bill is an additional $300 million for the College Work-Study program, as well as the following aid for public colleges and universities:

“Education Jobs Fund: $23 billion for an Education Jobs Fund to help States support an estimated 250,000 education jobs over the next two years.  95% of the funds will be allocated by States to school districts and public institutions of higher education to retain or create jobs to provide educational services and to modernize, renovate, and repair public education facilities. The remaining 5% of funds is reserved for State education-related jobs and administration of the Education Jobs Fund.”

The Senate will not act on a companion bill until January at the earliest.

Appropriations Committee Summary of H.R. 2847

Future of Tax Extenders Legislation Remains Unclear

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Despite House passage of the Tax Extenders Act of 2009 (H.R. 4213), it appears possible that tax provisions important to the higher education community may expire at the end of the month. The provisions include the education tuition deduction, the IRA charitable rollover, and the research and development tax credit. Disagreements in the Senate over offsets for the tax provisions, as well as the laser focus on health care reform, make passage of the legislation by the end of the month unlikely. However, it remains possible that the a bill will be passed in early 2010 that would be retroactive to the beginning of the year.

Timeline Slipping for Major Legislation

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Senate Foreign Relations Committee Chairman John Kerry (D-MA) announced this week that a climate bill will not likely emerge before the spring of 2010. The announcement confirms that at least 1 of 3 (and likely all 3) of President Obama’s top legislative initiatives for 2009 will slip into 2010 -the other two being health care and student aid reform. Some proponents of the three pieces of legislation hoped to move to completion this year, as to avoid political considerations made by the 2010 mid-term election season. The cap-and-trade climate legislation, introduced by Senator Kerry and Senator Boxer (D-CA), initially drew support from accross the aisle; as Senator Lindsay Graham (R-SC) came out in support of the effort. However, since then, the bill has garnered little bipartisan support; passing the Senate Energy and Public Works Committee without Rebuplican support on the panel and after a boycott of the mark-up. At present, it appears that Senator Kerry is trying to put together a compromise that will garner the 60 votes necessary to break a filibuster; much the same tactic that is being employed by Majority Leader Reid in advancing a health-care overhaul.

Given that the Senate companion bill to the House Student Aid and Fiscal Responsibility Act (SAFRA) has been linked to the passage of health care reform, student aid reform remains on hold. Leaders on the Hill have indicated that both chambers will likely be in session until the third full week of December.