House and Senate Budget Resolutions Include Major Cuts in Higher Education
Funding
Prior to adjourning for the two week Easter Recess, the House and Senate worked
feverishly on passage of each chamber's Fiscal Year 2016 Budget proposals establishing the
GOP's budget recommendations for defense and domestic spending over the next ten years.
Included in both budget blueprints are proposed cuts of over $100 billion in Pell and
Student Loan programs.
The bills, House Continuing Resolution 27 (H. Con. Res. 27) and Senate Continuing
Resolution 11 (S. Con. Res. 11), while non-binding (i.e. does not carry the weight of law),
serves as a blueprint for annual appropriation bills (establishing recommendations on how
and where the Budget Committee and Congress believe funds should be allocated) but does
not actually grant new spending authority (responsibilities which fall under the jurisdiction
of the Appropriations Committees).
As anticipated, both the House and Senate Budgets call for significant reductions in higher
education funding.
H. Con. Res. 27 includes an estimated $150 billion in cuts to higher education program
funding. These savings are obtained by:

Capping the maximum Federal Pell Grant award at its FY 15 level for the next
ten years.

Eliminating all mandatory funding for the Federal Pell Grants program,
cutting Pell funding by $89.3 billion.
Currently mandatory dollars both fund an increase in the Pell maximum award
above $4,860, as well as help fund a portion of the $4,860 maximum. While the
budget assumes these costs will be picked up on the discretionary side of the
budget, that may not occur given the overall cuts in all domestic programs proposed.
Thus, the Pell maximum could be forced to return to its annually appropriated level
of $4,860 – a cut of $915 or 15.8 percent – from the current $5,775 maximum
award.

Eliminating the in-school interest subsidies for undergraduate need-based
Stafford loans.
Removing the subsidy provides an estimated $34.8 billion in savings to the
government, but adds to the overall indebtedness of students who will now be
forced to cover these additional costs as part of their loan payments.

Eliminating public sector loan forgiveness.
This shifts another $10.5 billion in subsidies away from government spending to
student repayment obligations.

Eliminating the Obama Administration's and Department of Education's
recent expansions of Income-based repayments for student loans.
Savings estimates for this revision are projected to be another $16.3 billion. Once
again these savings are achieved through reduction in government subsidies and
increases in student repayment obligations.
S. Con. Res. 11 includes an estimated $125 billion in cuts to higher education funding. The
Senate proposals achieve the savings by:

Eliminating all mandatory funding for the Federal Pell Grants program,
cutting Pell funding by $89.3 billion.
Currently mandatory dollars both fund an increase in the Pell maximum award
above $4,860, as well as help fund a portion of the $4,860 maximum. While the
budget assumes these costs will be picked up on the discretionary side of the
budget, that may not occur given the overall cuts in all domestic programs proposed.
Thus, the Pell maximum could be forced to return to its annually appropriated level
of $4,860 – a cut of $915 or 15.8 percent – from the current $5,775 maximum
award.

Eliminating the in-school interest subsidies for undergraduate need-based
Stafford loans.
Removing the subsidy provides an estimated $34.8 billion in savings to the
government, but adds to the overall indebtedness of students who will now be
forced to cover these additional costs as part of their loan payments.
The House and Senate Budget Committee leadership will return to Washington next week
and begin Conference on the two bills – the process used to resolve differences between the
House and Senate proposals – resulting in a single piece of legislation which will be then be
voted on by both chambers in an effort to achieve support for final passage.
At stake in these deliberations for higher education are portions of the House proposal,
including the ten year cap on maximum Pell awards, the elimination of public services loan
forgiveness, and elimination of the income-based repayment subsidies.
Unfortunately, the final proposal is guaranteed to include the elimination of the mandatory
Pell funding and the elimination of the in-school interest subsidies because the proposals
are included in both bills and are therefore not likely to be negotiated further in the
Conference.
The important thing to keep in mind is, as noted at the beginning of this article, the Budget
Resolution is non-binding and is not enforceable. However, these recommendations make
clear the GOP's priorities, priorities which are likely to be either considered for adoption in
law by the Appropriations Committee or by the Education Committees are part of the
pending reauthorization of the Higher Education Act.