Category: Student Aid

Today, the House of Representatives will introduce a budget reconciliation package designed to achieve components of the President’s agenda. Budget reconciliation is a special procedure, not subject to a fillibuster in the Senate, that was intended to serve as a deficit reduction tool by forcing spending cuts or tax increases to meet the targets set forth at the beginning of an appropriations cycle in a budget resolution.

The legislation, The Student Aid and Fiscal Responsibility Act of 2009, advances President Obama’s goal of making the Pell Grant program an entitlement -not subject to annual appropriations debates. As has been discussed on this site, the Pell Grant entitlement would be funded by eliminating the Federal Family Education Loan program (FFEL)-which utilizes banks and guarantee agencies- in favor of the Direct Lending (DL) program. Financial institutions, Members of Congress with a heavy presence of financial institutions in their states/districts, and many conservatives have been against the elimination of the FFEL program. Just a few weeks ago, it appeared likely that a compromise would be stuck that fell short of a full Pell entitlement. However, the legislation offered today supports a Pell entitlement and a number of other student aid items.

Provisions of the bill:  Continue reading “House Budget Reconciliation Package Taking Shape”

This week, the Congressional Budget Office (CBO) released an analysis of the fiscal impact of President Obama’s FY10 Budget Request. The analysis looks at the budget request broadly, as well as focuses in on some of President Obama’s major proposals on health care and student aid.

Of particular note, CBO revised down — from $94 billion to $87 billion — an earlier estimate of the savings that would be realized from eliminating the Federal Family Education Loan Program (FFELP) in favor of the Direct Lending program. The new estimate jeopardizes the President’s proposal to use savings from FFELP to fund a Pell grant entitlement. There already appears to be little stomach in Congress for the creation of another entitlement program. House Appropriations Chairman David Obey (D-WI) has articulated that he is reluctant to create a new entitlement program while simultaneously trying to convince the American people that the majority in Congress is fiscally responsible. Nonetheless, a permanent Pell grant remains possible and at a minimum, funding recouped from the elimination of FFELP would be put towards increased Pell grant levels for students. It should be noted that the financial sector, and many in Congress, are pushing to maintain the FFELP program and the role of banks and guarantee agencies in the administration of federal student loans.

CBO: An Analysis of the President’s Budgetary Proposals for Fiscal Year 2010