White House Releases FY2019 Budget Request: Efficient, Effective, Accountable: An American Budget

February 13, 2018

Prepared by: Greg Marak gmarak@bosewashingtonpartners.com

On Monday, February 12, 2018, the White House released its FY 2019 budget request. The budget proposal, titled “Efficient, Effective, Accountable: An American Budget,” sets forth President Donald Trump’s priorities as Congress prepares to consider spending bills for FY 2019. It calls for major cuts to Medicare, Medicaid, food stamps, and other social programs, reductions that have long been targeted by conservatives. It’s notable that the plan would not eliminate the budget deficit after 10 years, which is an acknowledgment that large spending increases and a $1.5 trillion tax cut are putting pressure on government debt.

Regarding higher education, the budget eliminates the $733 million Supplemental Educational Opportunity Grants program, it consolidates GEAR-UP and TRIO programs and slashes their current combined $1.3 billion in funding into one $550 million state grant program. (The addendum adds $400 million back to the TRIO program so that continuation awards may be provided until the program transitions to a new State formula grant.) The budget cuts funding for Minority-Serving Institutions by consolidating six programs into one $147.9 million formula grant program. The budget says it provides $642 million to support “HBCU-focused programs.” It also proposes substantive changes to the Federal Work Study program. The budget summary includes no mention of the Federal Perkins Loan program, beyond listing it in the aid summary tables, and noting that no funding is requested.

In addition to the changes and cuts to higher education appropriations, the proposed budget would save $203 billion from student loan programs over ten years (FY 2019-2028). The budget proposes to grandfather existing borrowers in one of the current five income-driven repayment plans (IDRs) into the new single IDR plan. The new income-driven repayment plan caps a borrower’s monthly payment at 12.5 percent of discretionary income. Undergraduate borrowers would have any remaining balance forgiven after 15 years of repayment, but graduate-student debt would not be forgiven until after 30 years of repayment. All new loan policies would apply to loans originated on or after July 1, 2019, with an exception for students who borrowed their first loans prior to July 1, 2019 and who are borrowing to complete their “current course of study.”

In ED’s budget summary, there is a section entitled “Reform Campus-Based Aid Programs.”  The section mentions that “consistent with the President’s call to bolster effective workforce development programs, the Budget proposes to dramatically reform Federal Work-Study” and support more workforce and career–oriented programs. The Budget would reform the allocation formula “in order to focus scarce funds on schools based part on enrollment of Pell recipients. The section lists subsidized employment, paid internships, and “other designs” provided the placement were career or academically relevant as ways schools may “fund individual undergraduate students.”

At a Department of Education briefing following the release of the budget, Dr. A. Wayne Johnson, former FSA Chief Operating Officer, current head of the Office of Strategy and Transformation, spoke and answered some questions about the implications of the budget proposal on the future of student aid programs. He took time to review FSA’s Next Generation, FSA reforms and policy goals, then answered a question about plans to auto enroll severely delinquent borrowers into the new streamlined IDR plan.

The Department representatives were then asked who would be auto- enrolled, how many months would you need to be delinquent to be re-enrolled, and how the Department planned to get consent from those borrowers to re-enroll. A Department spokesperson answered that there are a number of policy priorities included in the budget but that the Department did not submit authorizing legislation or appropriations with the President’s budget, which she said will come later this spring.

The plan also calls for elimination of the public service loan forgiveness program and subsidized student loans. According to the budget plan, the principles for a reauthorization of the Higher Education Act include:

• Expanding Pell Grant eligibility for short-term programs.
• Reforming Federal student loan and repayment options.
• Recalibrating the grant allocation process.
• Ensuring institutional accountability.
• Reducing regulatory burdens.
• Improve transparency.
• Offering administrative updates and financial flexibility.
• Promoting free speech on college campuses.
• The Department’s fact sheet accompanying the budget is available online.
• The President’s full FY2019 Budget Request for the Department of Education is available