President Obama’s fiscal year (FY) 2014 budget request to Congress includes a maximum Pell Grant award of $5,785 for the 2014-15 award year, modifies student loan interest rate policy by making rates market-based, and would make some campus-based aid funds contingent on an institution’s ability to keep tuition low, provide good value, and graduate Pell-eligible students.
“The 2014 budget includes a combination of discretionary and mandatory funding that would make available $155 billion in new grants, loans, and work-study assistance—an increase of more than $57 billion, or 59 percent, over the amount available 2008—to help nearly 14.7 million students and their families pay for college,” according to a summary of the budget request issued by the U.S. Department of Education.
Regarding student aid and higher education, Obama’s budget requests Congress to:
If those rates were in place currently it would be more favorable for students than the existing fixed rate policy, at least in the current years. Subsidized Stafford Loans would have an estimated 2.9 percent rate, Unsubsidized Stafford Loans a 4.9 percent rate, and a 5.9 percent rate for PLUS loans. The proposal calls for interest rates to be determined annually and then fixed for the life of loan, mirroring the variable-fixed approach NASFAA has supported and advocated for since last year. The president’s budget request does not place a cap on interest rates.
Access and Affordability Proposals
In addition, the budget does not reflect sequestration cuts as it assumes the replacement of the sequester through a series of increases to revenue and spending cuts.
"Financial aid administrators applaud the President's efforts to make college accessible and affordable, particularly through the continued strong support given to the Pell Grant program," said NASFAA President Justin Draeger. "We are also heartened to see bipartisan support for finding a permanent, sustainable solution to federal student loan interest rates that would also stop the subsidized Stafford loan from doubling to 6.8 percent this July. Last month, we testified to Congress that all federal student loan interest rates should be market-based, variable, sustainable and avoid the one-year expensive fixes that have created confusion for students and parents. The President’s interest rate proposal accomplishes those goals and deserves consideration. We look forward to working with the Administration and Congress to find a viable path forward on interest rates before July 1.”
"We embrace the concept of shared accountability and responsibility in keeping the costs of college down and helping students succeed, and believe it must be done in a way that does not impede institutional freedom or unfairly penalize schools that serve diverse student populations,” Draeger said. “NASFAA's recent policy considerations put forward as part of the Bill and Melinda Gates Foundation's Reimagining Aid Design and Delivery outlined how a portion of campus-based funding could be used to incentivize schools to create environments that foster better-than-predicted student outcomes. NASFAA will continue to work with the Administration and Congress to ensure no qualified student is denied access to and success in higher education."
It is important to remember that the release of the president’s budget is just one step of the budget process. Both the House and Senate have also put forth FY 2014 budget proposals. The White House, Senate, and House proposals will now be considered and debated through the appropriations process—a process which typically alters, sometimes significantly, original proposals. Stay tuned to Today’s News for the latest budget updates.
Publication Date: 4/11/2013