By Hugh T. Ferguson, NASFAA Senior Staff Reporter

It’s been less than two weeks since the White House officially enacted spending levels for fiscal year (FY) 2022, but with the appropriations process very out of whack with the annual calendar, the administration on Monday formally unveiled its budget priorities for fiscal year 2023, impacting award year 2023-24.

The proposal includes $88.3 billion in discretionary funding for Department of Education (ED) programs, which is a 17% increase from the 2022 enacted level, including $26.3 billion for federal student aid programs. Specifically, the budget proposal would commit to doubling the maximum Pell Grant by 2029, starting with an increase to $8,670 for the 2023-24 award year, $1,775 more than the 2022-23 maximum award. Overall, the administration estimates that 6.7 million students from low- and middle-income backgrounds would benefit from the increased funding for the Pell Grant program.

Under Secretary James Kvaal said that ED would continue to look for all available avenues for increasing the annual Pell Grant to address its decline in purchasing power, with their request for increases in the fiscal year 2023 coming from both the mandatory and discretionary sides of spending instead of the typical soley discretionary funding requests.

“What we would like to see is to push forward on funding for Pell through whatever avenue, through appropriations funding, through reconciliation, and we want to make sure that we’re trying every strategy we can to reach the president's goal of doubling the Pell Grant by 2029,” Kvaal said.

The proposal would allocate $880 million for the Federal Supplemental Educational Opportunity Grant (FSEOG) program, and $1.19 billion for Federal Work-Study (FWS). Though the levels proposed in the president’s request represent slight decreases in funding from the FY 2022 enacted levels, the Biden administration has made clear its intent was not to propose FY 2023 funding levels lower than those recently enacted for FY 2022.

Because the president's budget request released this week was developed before FY 2022 spending was finalized earlier this month, the FY 2023 funding requested by the administration for a number of programs, including FSEOG and FWS, was inadvertently less than the  FY 2022 enacted levels. Roberto Rodríguez, ED’s assistant secretary for planning, evaluation, and policy development, explained how this budget was developed by relying on fiscal year 2021 enacted levels.

“We're really grateful here at the department for all the wonderful work that Congress has done on the fiscal year 2022 spending bill delivered earlier this month and as a result, the dynamic and the timing includes some interaction between those [2022] levels and those proposed [2023] levels, particularly across 34 programs, about $287 million,” Rodríguez said. “To be clear, the Department of Education and our administration welcomes and fully supports the increases that Congress provided and delivered through the omnibus to the various education programs here at ED, and we're eager to put this budget forward as a reflection of our administration's priorities, and we look forward to working with Congress and with our appropriators and our authorizers to build on those FY 22 levels in our FY 23 request.”

ED is expected to provide updated funding charts to include the fiscal year 2022 enacted levels as soon as Tuesday.

“This budget proposal is a significant step in the right direction to expand access to postsecondary education to more low- and middle-income students, and restore some of the purchasing power of the Pell Grant,” said NASFAA President and CEO Justin Draeger. “Of course, these proposals must come with accompanying legislation, and additional funding must come with renewed efforts to examine the entire student aid system, not the least of which includes a reexamination of how the current student loan system is or isn’t working for students and families. We call on members of Congress to work across the aisle to make that a reality.”

The document serves as a wish list of priorities for the administration, but also kicks off the budgeting process that will now turn toward the legislative branch hosting hearings and eventual markups, as the federal government sprints to meet its annual spending deadline at the end of September.

In terms of higher education, the proposal makes a number of investments that build off of Biden’s State of the Union address and bring more specifics to how the administration plans to invest in higher education.

According to Education Secretary Miguel Cardona, those enrolled in the Deferred Action for Childhood Arrivals (DACA) program would under this budget proposal also be made eligible for federal student aid, including access to the Pell Grant program.

ED officials also expressed their commitment to working with Congress to ensure that undocumented students are made eligible for the Pell Grant program, but for the time being would continue to use their authority to make American Rescue Plan (ARP) funding available to DACA students.

“Across the country, we must focus our efforts on recovery. That means ensuring all students — especially those from underserved communities and those most impacted by the pandemic — receive the resources they need to thrive,” Cardona said. “Importantly, this budget also invests in access to affordable higher education and the creation of stronger pathways that meet the demands of our workforce and connect students to well-paying jobs and fulfilling careers.”

The proposal also contains a $200 million “Career-Connected High Schools” initiative that would invest in competitive grants and partnerships with educational institutions, including community colleges, that offer academic and career instruction supporting early enrollment higher education during the last two years of high school and first two years of postsecondary education.

Of note, the budget request includes an increase of $752 million over the 2021 enacted level for historically Black colleges and universities (HBCUs), tribally-controlled colleges and universities (TCCUs), minority-serving institutions (MSIs), and low-resourced institutions, including community colleges.

These official budget materials, like the increase of funding for HBCUs, TCCUs, MSIs and additional institutions compare the 2023 fiscal year request to the 2021 enacted level.

Additionally, the administration’s budget proposal would provide $2.7 billion for the Office of Federal Student Aid (FSA), which is an increase of $800 million or 43% increase over the 2021 enacted level. These investments are meant to assist FSA in implementing improvements to its customer service capabilities and enable a successful student loan servicer transition following the department’s current short-term contract agreement that will keep six servicing companies operating through December of 2023.

The request also indicated Biden's continued interest in improving student loan repayment, stating that the administration “looks forward to working with Congress on changes to the Higher Education Act that eases the burden of student debt, including through improvements to the Income Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) programs."

The administration also released a tax proposal that would provide income exclusion for student debt relief, meaning borrowers would not be taxed on loans that are forgiven. The American Rescue Plan (ARP) has provided this benefit temporarily, for student debt discharged after Dec. 31, 2020, and before Jan. 1, 2026. The Biden administration’s request would make this provision permanent.

“Permanently extending the ARP's tax treatment of discharged student loan debt will encourage lower income borrowers to enroll in income-driven repayment (IDR) plans, remove barriers for colleges and universities seeking to provide relief on debts owed to them by students, and provide relief to borrowers eligible for discharges resulting from legal causes of action,” the proposal reads.

During a briefing hosted by ED officials, the administration also said they were committed to free community college even though funding for such a program was not housed within the budget request. Kvaal said there were active conversations focusing on how to build off of Congress’ Build Back Better framework.

It is unclear how Congress will tackle the administration’s agenda ahead of the midterm elections, where the campaigning for the fall is slated to kick into high gear this summer.

The budget request will get its first hearing this week, with the House Appropriations  Labor-HHS-Education Subcommittee slated to convene on Thursday, March 31 to begin discussions on the health-related provisions.

Stay tuned to Today’s News for more details on the budget and check out our coverage of the appropriations process.

Publication Date: 3/29/2022

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