President Barack Obama's proposed FY 2010 budget has major implications for student financial aid programs. In a February 24, 2009 speech, President Obama said:
"[W]e will provide the support necessary for you to complete college and meet a new goal: by 2020, America will once again have the highest proportion of college graduates in the world."
His budget proposal makes sweeping changes that his administration believes will further this goal. With this budget proposal, President Obama has elevated college access discussions to unprecedented levels. He has proposed something that no other president of this country has proposed: to make Pell a true entitlement through mandatory funding.
The proposed FY 2010 budget would:
- Increase the Pell Grant maximum award to $5,550 in the 2010-2011 school year; make the Pell Grant program mandatory to ensure a regular stream of funding and eliminate the practice of backfilling billions of dollars in Pell shortfalls each year; index Pell grants to the Consumer Price Index plus 1 percent in order to address inflation.
- Eliminate lender subsidies under the FFEL program and originate all student lending through Direct Loans, effective July 1, 2010.
- Simplify the student aid process.
- Modernize the Perkins Loan program, providing an additional $5 billion per year; change the campus-based allocation formula so that more schools can participate; use the Common Origination and Disbursement (COD) System to make, service, and collect loans.
- Create a new five-year, $2.5 billion Access and Completion Incentive Fund to support innovative State efforts to help low-income students succeed and complete their college education.
FY 2010 Budget Resources
Federal Budget History and Basics
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