Following closely on the heels of their counterparts in the House, on Wednesday Senate Republicans released a budget resolution for fiscal year (FY) 2016 that continues a trend of low-spending on discretionary programs. As a reminder, FY 2016 impacts the 2016-17 award year. While largely lacking in specifics, the spending plan being offered in the Senate would balance the budget in ten years and reduce the deficit by $4.4 trillion more than the budget proposed by President Obama. The proposal emphasizes spending on defense programs, and additionally repeals the Affordable Care Act.
A key similarity between the House and Senate proposals is a switch to so-called “fair-value” scoring for the student loan programs. Fair-value scoring builds in certain market risk penalties that ultimately result in higher cost estimates for federal credit programs. While the House proposal specifies this switch only for student loans and federal housing loans, the Senate proposal is written more broadly.
Like the House proposal, the Senate similarly instructs the Committee on Health, Education, Labor and Pensions (HELP) to achieve $1 billion in deficit reduction over the ten year period from FY 2016-2025.
While not official, sources have said that the Senate budget resolution includes, similar to the House, a $90 billion cut to the Pell Grant program, over ten years. This cut would likely be achieved by freezing the maximum award at the current level ($5,775) and funding the program solely through discretionary spending.
The House and Senate budget resolutions mark the next step in the budget process, following the release of President Obama’s FY 2016 budget request in early February. The budget process will continue to unfold in the coming months, and NASFAA will share additional updates through Today’s News. For additional background information and context, check out our interactive Federal Budget Process Tool.
Publication Date: 3/19/2015