Yesterday, the Congressional Budget Office released updated estimates on the costs and savings of generated from the president's budget request. The estimated savings from eliminating the Federal Family Education Loan Program (FFELP) decreased slightly from earlier estimates from $94 billion to $87 billion.
The updated estimates will make it harder to implement President Obama's proposal for a mandatory Pell grant program. According to reports, Democratic leaders are expected to push legislation that uses savings from eliminating FFEL to increase mandatory Pell spending. Moving all of Pell into mandatory spending appears to be at-risk because the estimated price tag and lack of offsets needed for such a change. Rep. David R. Obey (D-WI), chairman of the House Appropriations Committee, recently said in a House subcommittee hearing that he was wary of creating a new entitlement program "in the midst of trying to convince people that we're financially responsible."
In March, CBO issued a preliminary report analyzing the policy proposals of the president's preliminary budget request. That budget request lacked many of the details CBO needed to conduct a more thorough analysis. The results of CBO's updated analysis are similar to those released in March, but with slight differences.
CBO' now estimates a 10-year deficit of $9.1 trillion, about $130 billion lower than it estimated in March. Under the president's proposals, the deficit in 2009 would total $1.8 trillion and equal 13 percent of gross domestic product. That's $157 billion more than what is expected to occur under current law, but can mostly be attributed to war spending in Iraq and Afghanistan, according to the CBO. These deficits have raised major concerns with Republicans and many fiscally conservative Democrats.
The House is expected to begin markup on these education proposals within the next two weeks. With the Senate neck-deep in healthcare legislation, it is still unclear whether it will take up education budget matters before the August recess.
Media Coverage
Behind the Scenes, a Student-Loan Overhaul Takes Shape The Chronicle of Higher Education
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