House and Senate Pass FY 2014 Budget Resolutions

Just days after finalizing the fiscal year (FY) 2013 budget process, both the House and Senate passed budget resolutions outlining priorities for the FY 2014 budget. Budget resolutions are not prescriptive in nature, rather they are non-binding narrative documents that serve as each chambers’ agreed upon budgetary roadmap for the upcoming fiscal year. The House and Senate FY 2014 budget resolutions differ greatly from one another, particularly in their priorities for student aid.

The House, under the leadership of Chairman of the Budget Committee Paul Ryan (R-WI), passed a budget resolution that would balance the federal budget in 10 years and impose an additional $1 trillion in cuts on top of already-scheduled sequester cuts. While the resolution does not provide specific funding levels, it includes the following assumptions for student aid: 

 

  • Freeze the Pell Grant maximum for 10 years;
  • Consider implementing a maximum income cap for the Pell Grant eligibility;
  • Eliminate mandatory funding for the Pell Grant program and fund the program completely through discretionary funds;
  • Eliminate the in-school interest subsidy for Direct Loans;
  • Eliminate both Pell and Campus-based Administrative Cost Allowances;
  • Repeal several of the need analysis changes that were made through the College Cost Reduction and Access Act (CCRAA) of 2007, including the reduction in the auto-zero threshold and increases to the Income Protection Allowance (IPA);
  • Repeal scheduled changes to the Income-Based Repayment (IBR) program that were put into place through the Healthcare and Education Reconciliation Act (HCERA) of 2010.  These changes would reduce loan payments to 10 percent of discretionary income versus the current 15 percent, and enacting loan forgiveness at 20 years versus the current 25 year threshold.

 

The Senate-passed budget resolution was completed under the leadership of Chairwoman of the Budget Committee Patty Murray (D-WA) and would replace current sequester cuts with a 10-year deficit reduction plan made up of spending cuts and revenue increases.  The Senate resolution outlines the following for student aid:

 

  • Maintain scheduled increases for Pell Grant funding;
  • Fund future Pell Grant shortfalls;
  • Prevent Subsidized Stafford Loan interest rate from increasing to 6.8 percent on July 1;
  • Provide general authority for the consideration of budget neutral bills, joint resolutions, or amendments that make higher education more accessible and affordable, increase enrollment and completion for low-income students, standardize financial aid award letters, or promote college savings.

 

The House and Senate will now come together to try to find compromise on the resolutions before moving to the appropriations, or funding, part of the budget process, though it is unlikely that they will come to an agreement. It is important to remember that the resolutions are non-binding and essentially act as a philosophical marker to guide appropriations committees. In fact, in the past several years the Senate has not even passed a budget resolution.  This year, however, lawmakers were under pressure to pass resolutions due to a law passed in February that would have suspended their pay if they did not complete resolutions by April 15.

Another key player in the budget process is President Barack Obama. The president usually releases a budget request in early February, but the president has not yet released the FY 2014 request.  Typically, the president’s request comes before the House and Senate work on their Budget resolutions, making this year unusual.  The president is expected to release his FY 2014 budget in early April.

NASFAA joined other higher education groups this past week in expressing support for the provisions of the Senate budget resolution that provide stable funding for the student aid programs, and expressed opposition to provisions in the House budget that would make severe cuts to the Pell Grant program.

Publication date: 03/26/13 

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