Dive Brief:

• The U.S. Department of Education is requesting $59.9 billion in the FY2019 federal budget, a 10.5% decrease (or $7 billion less) from FY2017 for K-12 and higher education. However, according to analysis from New America, an addendum attached to the budget plan calls for a cut of $3.8 billion, or 5.6%, which reflects the actual spending deal Congress struck last week.
• The proposal calls for institutions to share accountability in student loan repayment programs, while eliminating the Public Service Loan Forgiveness program and consolidating income-driven loan repayment programs into one option, which New America says is a “middle-ground approach” that helps borrowers stay enrolled in affordable payment plans. However, the changes overall represent a decrease in benefits to borrowers, saving the government an estimated $174 billion over the next decade. The budget plan also extends Pell Grant eligibility to short-term credential programs spanning as few as eight weeks.
• The proposal places emphasis on the workforce, with funding for apprenticeships, and maintains $1.1 billion in funding for career and technical education. In addition, it issues reforms to federal work study programs to support career training for low-income students, while directing at least $200 million toward STEM education.

Dive Insight:
House and Senate Republicans appear to be moving forward with revisions to Higher Education Act via the PROSPER Act, and these discussions offer a far better indication of what higher ed priorities will actually take center stage in funding legislation.

Financial aid and loan repayment
Concerns about college affordability and student outcomes have been among the biggest priorities for Congress in talks about the HEA. Senator Lamar Alexander (R-TN), chair of the the Health, Education, Labor, and Pensions (HELP) Committee, has been advocating for “more effective accountability measures focused on the repayment of federal student loans.”

Both the Trump administration’s budget proposal and the PROSPER Act seek to eliminate the Public Service Loan Forgiveness program, subsidized Stafford loans, and Supplemental Educational Opportunity Grants, which provide additional grants to low-income students. They also address loan repayment options by consolidating income-driven repayment plans into one plan, though they disagree on approach. The Trump budget offers a plan where borrowers pay up to 12.5% of their discretionary income each month, whereas the PROSPER Act includes an income-driven repayment capped at 15% of a borrower’s adjusted gross income.

Clare McCann, deputy director for federal and education policy at New America, added the PROSPER Act is generally more specific in how it would limit financial aid.

“The PROSPER act goes a lot further on some of these things,” she said. “It would severely limit the maximum amount of loans that can go to parents of undergraduate students and that can go to graduate students. The budget request is silent on that.”

Workforce and federal work study
Both President Trump and congressional leaders have emphasized the need for colleges to better meet workforce needs, but the entities see different pathways to getting this done. The latter calls for comprehensive reauthorization of the Carl D. Perkins Act so CTE programs pertain to STEM and high-demand careers; the PROSPER Act does not.

The two also deviate on how federal work study should be funded. While the PROSPER Act nearly doubles the amount dedicated to FWS from about $1 billion in 2016 to $1.7 billion and rewards institutions improving graduation rates for Pell Grant recipients, the budget proposal — which initially capped FWS at $200 million — leaves funding at $500 million in the addendum.

Emily Bouck, a policy analyst at Higher Learning Advocates, an education advocacy group, said the budget plan shows the administration’s efforts to link workforce and education together, but not very clearly.

“In reality, Federal Work Study is a higher education program, it’s not a workforce program,” she said. “The way it’s being talked about doesn’t really align with how these programs are run in real life. Federal work study is already intended to target low-income students.”

Pell Grants and student access
When it comes to expansion of Pell Grant eligibility, McCann said there is a consensus between the executive and legislative branches. Both the budget and the PROSPER Act are “status quo,” she said, on the size of the program; but there’s a proposal in the House HEA bill that would give a $300 Pell bonus to low-income students who take 15 credits instead of 12 credits.

Both the budget request and the PROSPER Act open Pell Grants to short-term programs, details are lacking around what is considered “high quality.”

Bouck said while expanding the federal Pell Grant program to accommodate market changes makes sense, there is not enough focus on accountability.

“I think this is a double-edged sword,” she added. “Expanding Pell Grants to short-term credentials is a positive, as many students are getting their credentials this way. But quality assurance has to be first and foremost.”

The PROSPER Act, said McCann, would actually also extend loans to those programs as well and would eliminate an existing requirement that existing programs have to meet a 70% completion rate and 70% placement rate.

Government efficiency and quality assurance
Senior Fellow for Higher Education Policy at Third Way Itzkowitz believes an increased focus on institutional accountability via risk-sharing in financial aid is a bright spot in the Trump proposal. “We’ve known for too long that billions in federal student aid are being funneled to institutions that do very little to ensure that students are able to graduate with a modest paying job that allows them to adequately pay down their educational debt. The White House budget asks that institutions share some of this risk,” he said.

At the same time, the budget also focuses on efficiency, eliminating funding for 29 discretionary programs deemed “ineffective or redundant,” while also reducing or consolidating 13 more programs “to yield program management efficiencies.”

“There are changes in the budget to TRIO and GEAR UP, the two main college access programs, and so basically these would be consolidated into one grant programs to states,” McCann said. “Right now they are both competitive grants to providers for the most part and so that would be a pretty big shift, and there was nothing similar to that in the House HEA bill.

Both the budget and PROSPER align on de-funding Title II programs, which covers the teacher quality partnership program.

MSIs and HBCUs
As part of the efficiency movement, the president’s budget also calls for several funding grant programs for minority-serving institutions and historically black colleges and universities to be consolidated. The budget consolidates the Title III and Title V programs, but the funding requests equal the FY2016 levels. In a climate in which the overall budget is being slashed by $7 billion, many advocates see level funding requests as a win. However, while they’re encouraged by level institutional funding requests, leaders at advocacy organizations like the Thurgood Marshall College Fund, which represents the nation’s public HBCUs, said changes to the Federal Supplemental Educational Opportunity Grant and Work Study programs raise concerns about the impact on students at those institutions and their ability to graduate.

However, there is some indication the viability of these institutions is on the radar for this Congress. In the FY2018 budget deal approved last week by Congress, Dillard University, Southern University of New Orleans, Xavier University and Tougaloo College were spared the need to repay sizable debts associated with borrowing to rebuild in the wake of Hurricane Katrina. And though the House’s PROSPER Act seeks to penalize institutions receiving Title III and Title V funds which do not meet a 25% graduation rate metric, HBCUs and Tribal Colleges are specifically exempted from this provision.

Source: EducationDive