Congress Clears FY 2005 Omnibus Appropriations Bill; Student Aid Funding Cut; ED Free to Issue Updated Need Analysis Tax Table Further Reducing Title IV Eligibility

On Saturday Congress completed action on FY 2005 Appropriations. President Bush is expected to sign the bill this week.

With a few exceptions, program funding for Title IV student aid programs will be reduced from last year's funding levels, as an across-the-board cut of less-than-one percent (0.83% to be exact) is applied to all non-defense/homeland security domestic discretionary programs.  However, the maximum award for Federal Pell Grant Program remains at $4,050 for the third year in a row, even though there is an increase in the total amount of funding for the program from the prior year.

Also, the Congress opened the way for ED to issue a need analysis update of the allowance for State and Other Taxes, as it tried to do last year until prohibited from doing so by Congress. The likely results of such an update will be tens of thousands of Pell recipients losing their awards entirely and over a million Pell recipients having reduced eligibility. It is difficult at this time to estimate the impact an update may have on other Title IV programs.

The Conference Committee rejected an amendment contained in the Senate Appropriations Committee-approved bill for FY 2005 that would have extended for an additional year a prohibition preventing the Department of Education from implementing a need analysis update of the State and Other tax tables.  The Congress had approved a ban last year (sponsored by Senator John Corzine, D-NJ) on ED action in this area for FY 2004. Without a prohibition, the next step would be for the Department to publish updated tax tables in the Federal Register.  To ensure the smooth delivery of Title IV student aid, the Department would need to issue the updated tax tables sooner rather than later. Such a change would be for AY 2005-2006.

The appropriation bill will eliminate Federal Perkins Loan Program Capital Contributions, but continue Perkins Loan forgiveness.  Only the SEOG, TRIO, and GEAR-UP Programs will see their FY 2005 funding increase over last year's funding.

While Congress reduced most Title IV student financial aid program funding, it did reject an Administration proposal to fund at a level of $33 million an Enhanced Pell Grant program that would have provided $1,000 more in Pell Grant funding for individuals who successfully complete a rigorous high school curriculum.  Congress also rejected an Administration proposal that would have had the effect of cutting Pell Grants when the amount of funding provided by the Congress was insufficient to cover the costs of the program.  The Conference Report does not include House legislative language on loan consolidation that was made moot when ED reversed established loan consolidation policy in September.

Note: Amounts in thousands (add ,000 to each amount except Pell maximum)

Program	FY 2004 Enacted	President's FY 2005 Request	House FY 2005 Passed	Senate FY 2005 Committee Reported	Conference FY 2005 Final
Pell Grant Maximum Award	$4,050	$4,050	$4,050	$4,050	$4,050
Pell Grant Available Funds	$12,006,738	$12,830,000	$12,830,000	$12,830,000	$12,361,000*
Supplemental Educational Opportunity Grants	$770,455	$770,455	$794,455	$799,850	$778,484*
Federal Work-Study	$998,502	$998,502	$998,502	$998,243	$989,957*
Federal Perkins Loan Capital Contributions	$98,764	$0	$0	$98,764	$0
Federal Perkins Loan Loan Cancellations	$66,665	$66,665	$66,665	$66,665	$66,111*
LEAP	$66,172	$0	$66,172	$66,172	$65,622*
TRIO Programs	$832,559	$832,559	$842,559	$844,500	$836,289*
GEAR-UP	$298,230	$298,230	$318,230	$302,500	$306,395*
Byrd Scholarships	$40,758	$40,758	$0	$41,000	$40,659*
FIPSE	$157,700	$32,011	$32,011	$157,700	$162,554*
Javits Scholarships	$9,876	$9,876	$9,876	$9,876	$9,794*
Graduate Assistance in Areas of National Need (GAANN)	$30,616	$30,616	$30,616	$30,616	$30,361*
Thurgood Marshall Legal Education Opportunity Program	$0	$0	$0	$3,000	$2,975*

*Final program funding reflects an across-the-board cut of 0.83 percent from levels agreed to in the House-Senate Conference Report.

By Larry Zaglaniczny
NASFAA Director for Congressional Relations

Posted November 23, 2004 on www.NASFAA.org, Web Site of the
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