Federal update: Washington budget talks spur group’s analsysis of impact on higher education

Lori Clark
Lori Clark

In Washington, D.C. …

President Obama submitted his FY 2014 budget to Congress last week, two months later than normal. This delay is attributed to the implementation of sequestration and the uncertainty with the incomplete FY 2013 budget.

The president’s proposed funding levels for specific programs, including those of interest to NIU and higher education, will help frame the debate as Congress moves through its appropriations process. The House and Senate have both passed their own FY 2014 budget resolutions, and there are significant disparities between the House and Senate resolutions.

An analysis prepared by the American Association of State Colleges and Universities reports the following higher education impacts:

  • Pell Grants: There would be sufficient funding to support the Pell Grant program without requiring any eligibility changes to the current program. FY 2014 funding requested would support an estimated maximum award of $5,785 in academic year 2014-2015, an increase from the current maximum award of $5,550.
  • Campus-Based Student Financial Aid Programs: There are three programs in this category – Supplemental Educational Opportunity Grants (SEOG), Federal Work Study (FWS) and Perkins Loan programs. Formula changes are proposed for all three programs. For the SEOG and FWS programs, funds would be provided to institutions that keep net tuition down, provide good value, and serve low-income students effectively. The proposal contains an additional $150 million for FWS as a path to double the number of recipients in five years. The administration is proposing to double the capital available for Perkins loans and expand the program to more institutions. The new loans would not contain those benefits currently offered in the program of a reduced interest rate and several loan forgiveness provisions, but it would be offered under terms similar to unsubsidized federal loans.
  • Student Loan Interest Rates: The administration is proposing a change from the current fixed interest rate policy to a market-based variable rate. The new proposed rates would not only be variable, but they would not be capped and would be equal to the 10-year Treasury Bill rate (currently about 1.8 percent) plus .93 percent for subsidized loans, 2.93 percent for unsubsidized loans, and 3.93 percent for PLUS loans. The interest rate would be locked in for the life of the loan.
  • Pay As You Earn: A recently implemented proposal offers new borrowers (after Oct. 1, 2011) the opportunity to calculate payment on their outstanding student loan debt at 15 percent of their income. The president’s FY 2014 proposal would open this program to all borrowers and reduce the payment option to 10 percent of their income. After 20 years of payments in good standing, any outstanding loan balance would be forgiven. The proposal also would eliminate the taxation of the amount that is forgiven after the 20-year repayment period.
  • Teacher Preparation: The president is proposing the elimination of funding for the Teacher Quality Partnership and a number of other elementary and secondary teacher programs, instead creating a new Teacher and Leader Innovation Fund that would support P-12 in identifying, rewarding, retaining and advancing effective teachers, teacher leaders and principals. The TEACH Grant program would be eliminated and a new Presidential Teaching Fellows Program would be established that would direct up to $10,000 in scholarships to students further advanced in their program of study and enrolled in a “high-performing” teacher preparation program.
  • Race to the Top: The president proposes $1 billion to fund a Race to the Top-College Affordability and Completion Program. This funding would support up to 10 states that commit to:
    • sustain fiscal support for higher education while modernizing policies to constrain costs and improve outcomes;
    • remove barriers preventing the creation of innovative student learning methods and new degree pathways;
    • empower consumer choice through increased transparency; and,
    • smooth transitions into college and between institutions of higher education.
  • First in the World: Once again, President Obama is proposing $260 million for a First in the World Fund. Up to $175 million would support an evidence-based grant competition encouraging innovative approaches to college completion, supporting the research to build evidence for successful strategies, and scaling-up and disseminating proven strategies. A priority would be included for projects designed to improve access and success of high-need secondary students.
  • High School Redesign: A $300 million grant program is being proposed for high school partnerships. To qualify, a high school would need to partner with a higher education institution and a business, industry, non-profit or community-based organization to redesign the high school. Redesigned high schools are expected to infuse college coursework and career-related experiences into the curriculum to ensure students graduate college and career ready.
  • Dual-Enrollment Programs: The FY 2014 budget submission eliminates federal support of the Advanced Placement Program and directs the savings into a proposal to fund dual-enrollment programs ($42 million). The focus of these funds is on dual-enrollment programs that align with and target local workforce needs and career pathways.
  • Other Higher Education Programs: All minority-serving institution programs, TRIO and GEAR-UP would be level-funded, and there would be a slight increase in funding for international education programs.

The Voices section of NIU Today features opinions and perspectives from across campus. Lori Clark is director of State and Federal Relations for NIU.

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