After passing in the House of Representatives earlier this week, the Senate early this morning passed a bipartisan budget agreement by a vote of 64 to 35. The agreement, negotiated by Republican and Democratic congressional leaders and President Obama, would lock in spending levels for the next two years and push back debate on the debt ceiling until March 2017. The bill now moves to President Obama’s desk for his signature.
Without this budget agreement, the U.S. Treasury would have run out of money and could have defaulted on its financial obligations beginning November 3 because of the inability to borrow more money due to the borrowing cap known as the “debt ceiling,” which can only be raised with congressional approval.
The deal would raise the overall budget caps imposed by the Budget Control Act (BCA) of 2011. The BCA automatically cuts from both defense and domestic funding until 2021, a process known as “sequestration.”
In addition, the budget deal would raise the sequestration-level budget caps for two years. For federal fiscal year 2016 (award year 2016-17), which began on October 1, the domestic funding budget cap is raised by $25 billion, and the budget cap for FY 2017 is raised by $15 billion. Roughly $8 billion in additional funding in both 2016 and 2017 will come from the Overseas Contingency Operation (OCO) fund. In total, the budget agreement represents a $56 billion increase to domestic spending over the next two fiscal years--a significant amount given the recent years of fiscal austerity.
NASFAA has been strongly supportive of efforts to raise the budget caps for non-defense discretionary programs, which includes the vast majority of federal student aid dollars.
The budget agreement also includes several non-budgetary policy items. Most relevant to the student aid community, the bill amends the Telephone Consumer Protection Act (TCPA) to allow loan servicers to use automated telephone equipment to call cellular phones for the purpose of collecting debts.
Congress will now have until December 11, the expiration of the current continuing resolution (CR) to negotiate spending allocations for the increased budget caps. If Congress cannot come to an agreement in December, the government could shut down. You may recall that Congress pushed back the deadline to avoid a government shutdown at the end of September with a temporary CR, a stopgap funding mechanism to keep the federal government funded until a long-term spending bill can be passed.
With budget fights and debt ceiling debates pushed off for the next two years, Congress may find increased calendar time for considering other matters, such as the reauthorization of the Higher Education Act.
NASFAA will continue to monitor congressional activity and advocate for the priorities of student financial aid administrators nationwide.
Publication Date: 10/30/2015