By Hugh T. Ferguson, NASFAA Senior Staff Reporter

Speaking before members of the House Appropriations Labor, Health and Human Services, Education, and Related Agencies (Labor-H) Subcommittee on Tuesday, Education Secretary Miguel Cardona urged lawmakers to support the Department of Education’s (ED) fiscal year 2024 budget request, including an increase in funding for the Office of Federal Student Aid (FSA) as it continues the implementation of FAFSA simplification.

Not doing so, Cardona argued in his written testimony, “would result in reduced services for students, families, and borrowers in addition to putting the systems that hold sensitive data for over 40 million Americans at risk.”

The president's budget proposal would boost funding for ED by 13.6%, and includes plans to increase the maximum Pell Grant award by $820, provide more funding for FSA, and expand access to free community college. But with the looming debt ceiling, congressional Republicans have floated the need to broadly cut federal spending.

During Tuesday’s hearing, lawmakers questioned Cardona on a wide range of education-related issues. In terms of higher education, members focused on the student loan portfolio, how the debt ceiling could impact ED’s funding level, as well as specific funding levels for a number of higher education programs.

Rep. Robert Aderholt (R-Ala.), chair of the subcommittee, at the outset told Cardona that the president’s budget request was too high.

“I believe a more responsible approach for your budget is called for, especially as painfully high inflation continues to strain American families' budgets,” Aderholt said.

The chair also took issue with Biden’s “extreme executive overreach” in offering widespread federal student loan forgiveness and the continued extension of the pause on student loan repayment and interest accrual.

“Not only is this inflationary, but also people who are making hundreds of thousands of dollars a year are not being asked to pay their student loans back,” Aderholt said. “I think this is blatantly unfair to the millions of Americans who never went to college and also to those who do not have student loan debt.”

In contrast to the chair’s remarks, Rep. Rosa DeLauro (D-Conn.), ranking member of the full Appropriations Committee and of the Labor-H subcommittee, primarily focused on the impact of potential budget cuts that are being floated by House Republicans as a part of the ongoing talks surrounding the debt ceiling.

Those supposed cuts were recently proposed by Speaker Kevin McCarthy (R-Calif.), who in remarks on Monday indicated that the House would consider legislation that would freeze spending at last fiscal year’s levels.

DeLauro and subcommittee Democrats used their questioning to highlight the ways in which programs like Pell Grants could be subject to cuts in annual funding should such a freeze be enacted.

Rep. Mark Pocan (D-Wisc.) asked Cardona what impact potential budget cuts would have on the Pell Grant program, and both cited a potential 22% cut could result in the maximum award being reduced by $1,000, with many students losing eligibility.

“There are about 6.6 million Pell Grant recipients; all of them would have a decrease of about $1,000,” Cardona said. “That $1,000 for some might be the difference between registering and not registering.”

Cardona, in response to questions from committee Democrats, also stressed the importance of funding for FSA and how cuts could be detrimental to a number of initiatives including but not limited to the Public Service Loan Forgiveness (PSLF) program, borrower defense, the resumption of student loan repayment, and FAFSA simplification.

“I want to commend… the entire team who are working really hard to try to fix a broken system and provide opportunities,” Cardona said. “I want to stress the importance of the funding in particular to FSA and the millions of Americans who are waiting for support and service, whose services will be impacted if we cut funding.”

Cardona also stressed the importance of investing in students so that individuals from all backgrounds have the opportunity to pursue their educational goals. During the hearing, Cardona also said that the implementation of FAFSA simplification will increase the number of students who have access to higher education.

But Republicans pushed back on the budget cut projections that Democrats put forward. Rep. Mike Simpson (R-Ind.), for example, argued that the spending reductions have not yet been outlined.

“We have heard about the death and destruction that’s going to happen if all of these cuts go into effect. The reality is nobody knows yet,” Simpson said. “Even in this bill if there was a 20% cut, it doesn't mean that it is going to be in education, it could be in other areas.”

Simpson also questioned Cardona as to how ED was working to lower the costs of higher education.

“While we spend a lot of time talking about targeted debt relief and discharging of loans, I'm just as proud of the work that we're doing to hold higher education institutions accountable for a good return on investment,” Cardona said, highlighting gainful employment and borrower defense regulations, as well as ED’s low-financial value watch list as initiatives that will help bring more transparency and accountability to higher education.

Aderholt questioned Cardona on the budget’s language that would expand free community college through a new federal-state partnership, which would be initially funded with $500 million in a new discretionary grant program, and argued that the proposal would contribute to ongoing inflation by turning loans into grants and would “punish” former students who paid off their loans.

Cardona said the initiative aims to make higher education more accessible to students and that the budget, in tandem with the department’s regulatory agenda, will make higher education more affordable.

“We have a problem in this country and we are committed to fixing it,” Cardona said of higher education financing. “We want to make sure that while we're looking at fixing a broken system, like the Public Service Loan Forgiveness (PSLF) program, we're also looking to drive down college costs to make sure that there's a good return on investment.”

DeLauro sought insight from ED on how it was handling for-profit online academic program managers (OPMs), which she referred to as the “new predators in higher education,” and argued that their arrangements were predatory.

Cardona said ED was going through a thoughtful review of OPMs, an issue that the Government Accountability Office (GAO) flagged for the department, but added that students have demanded flexibility with online options. Cardona added that ED wants to make sure that its oversight is done in a way that protects students and that the department will work toward rules to balance those objectives.

During the hearing members also focused on potential expansions to the Pell Grant program.

Rep. John Moolenaar (R-Mich.) brought up the issue of short-term Pell Grants, a topic of bipartisan interest, and sought details on how flexibility to the program could help students make use of more short-term industry approved programs.

Cardona said it was important to recognize the benefits of short-term Pell Grants and being open to programs giving students what they need to join the workforce in a shorter period of time.

“If we are to consider that, we have to also make sure that we are not putting our students in a disadvantage where they are using their Pell dollars and not having it later, and ensuring accountability for good programming,” Cardona said. “I am a big believer in [looking] at different options, but [ensuring] that we are increasing accountability and making sure that they are quality programs.”

Rep. Julia Letlow (R-La.) questioned whether FSA is being proactive in its contingency planning and whether the office is preparing clear guidance for loan servicers and students when loan repayment resumes.

“We are working diligently to make sure that we're improving our systems to be more clear, to have what we call a ‘long onramp’ so that borrowers know what is needed from them, and when [it] is needed,” Cardona said.

Letlow urged ED to not continue to drag out the repayment pause and said the department should be using the wind-down of the emergency declaration to prepare for the repayment onboarding process.

Moving forward, spending negotiations are likely to be complicated this year, with debate over the debt ceiling being used as a negotiating tool.

According to House leadership, the aim is to bring spending bills to the House floor in June.

Publication Date: 4/19/2023

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