The Obama administration released additional details yesterday about the president's 2010 fiscal year budget proposal. The $3.4 trillion budget request for discretionary spending programs would provide an additional $500 million in discretionary spending for the Department of Education. This does not include increased spending for Pell Grants, which would be included in mandatory spending under the president's higher education reform proposal.

"I continue to be impressed with President Obama's commitment to making college more accessible and affordable for the nation's students and families," Day said. "The administration's budget proposal would make bold changes to financial aid and nothing less than bold action is needed if we are going to accomplish the President's goal of dramatically increasing the number of postsecondary graduates in this country."

The Obama administration issued its initial budget proposal in February, and provided additional details yesterday, so there weren't many surprises for financial aid programs. The administration proposes to:

• Originate all new loans using Federal capital, eliminating subsidies to private financial institutions, which would save $21 billion over 5 years.

• Use loan program savings to expand Pell Grants ($5,550 maximum award for the 2010-11 academic year) and make them an "appropriated entitlement" that would be funded on the mandatory spending side of the budget, but give appropriators some say in setting spending levels.

• Expand and redesign the Perkins Loan program with $6 billion a year in new loan volume (six times the current Perkins volume). Loan volume will be allocated using a method - to be determined in consultation with Congress - to encourage colleges to control costs and offer need-based aid to prevent excessive indebtedness. Instead of being serviced by the colleges, the loans would be serviced by the Department of Education along with other Federal loans. The loans would have the same low 5 percent interest rate and allowed loan amounts (both undergraduate and graduate) as in the current Perkins program. Institutional loan forgiveness costs on existing loans, currently supported by discretionary appropriations, would be fully funded from the Federal share of Perkins Loan collections. To make the loans available to more students and help finance the expanded Pell Grant, interest on the loans would accrue while students are in school.

• Invest $500 million in 2010 and $2.5 billion over 5 years in the College Access and Completion initiative to build a Federal-State-local partnership to improve college success and completion, particularly for students from disadvantaged backgrounds. This time-limited, mandatory program would make flexible grants for States and national entities to undertake innovative programs designed to increase postsecondary enrollment and completion, with an emphasis on efforts that produce data for evaluation and improvement. This effort will expand the knowledge base about what works in increasing college enrollment and graduation and disseminate these best practices. States would be able to use a portion of the funds to continue college outreach and information activities now supported through FFEL program subsidies.

"Congress has laid the groundwork to adopt the President's student aid proposals and financial aid administrators are understandably wary about some possible unintended negative consequences that those proposals might have on students and families," Day said. "I urge Congress and the administration to continue to work with financial aid professionals and other higher education stakeholders to ensure that the changes to the student aid program that are ultimately enacted are in the best interests of students, families and taxpayers."

2010 Budget Request Spending Levels

Program	2008 Actual	2009 Estimated	2010 Estimated
Pell Grants (discretionary)	$14.2 billion	$17.3 billion	$0
Pell Grants (mandatory)	$2 billion	$2.1 billion	$24.7
Pell Grants (ARRA)	$0	$17.1 billion	$0
Federal supplemental educational opportunity grants (SEOG)	$757.5 million	$757.5 million	$757.5 million
Federal work-study	$980.5 million	$1.2 billion - including ARRA funds	$980.5 million
Federal Perkins: Loan cancellations	$64.3 million	$67.2 million	$0
ACG/SMART Grant	$395 million	$73 million	$1.4 billion
New College Access and Completion Fund	n/a	n/a	$500 million
Leveraging educational assistance partnership	$64 million	$64 million	$64 million
Federal TRIO programs	$885 million	$905 million	$905 million
Gaining early awareness and readiness for undergraduate programs (GEAR UP)	$303 million	$313 million	$313 million
Byrd honors scholarships	$40 million	$41 million	$41 million
Javits fellowships	$10 million	$10 million	$10 million
Graduate assistance in areas of national need	$30 million	$31 million	$31 million
Thurgood Marshall legal educational opportunity	$3 million	$3 million	$3 million
B.J. Stupak Olympic scholarships	$1 million	$1 million	$1 million
Child care access means parents in school	$16 million	$16 million	$16 million

Media Coverage

Fleshing Out the Federal Budget Inside Higher Ed

For Higher Education, President's Budget Adds Little, Subtracts Little The Chronicle of Higher Education

Education Department seeks $47.6 billion United Press International

Opinion: Paying for School The Washington Post

By Haley Chitty
NASFAA Director of Communications

Posted 05/08/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.