Student Aid Programs Largely Level-funded in Spending Deal

By Stephen Payne, Policy & Federal Relations Staff

In a $1.1 trillion spending bill released late Tuesday night, congressional leaders have reached a compromise for government funding for federal fiscal year (FY) 2016. Coupled with the “Omnibus” spending package, a bill to extend several major tax breaks is also expected to move through the House and Senate before members depart for their holiday recess.

Though budget caps were raised in November as part of a broader budget deal, which resulted in a bigger pool of money for education programs, most student aid programs are flat-funded for FY16, which will affect award year 16-17. While most programs see level funding, the agreement includes increases for the TRIO programs and GEAR UP. Though few programs see increases, some of the devastating cuts scattered across both the House and Senate bills released over the summer have been remedied.

The scheduled maximum Pell Grant will increase to $5,815, a $40 increase, and importantly, the Pell Grant discretionary fund will remain level, instead of facing the $370 million cut proposed in the House bill that would significantly add to concerns of future shortfalls.

The Senate’s spending proposal this summer included cuts to both Federal Work Study and the Federal SEOG program, but in the new agreement, both programs will be level-funded at FY15 levels.

The bill’s joint explanatory statement, a legally binding document that expands on the bill’s provisions, addresses customer service for borrowers in loan servicing, including a requirement to publish a “common policies and procedures manual for servicing that applies to all Direct Loan servicers” by March 1, 2016. Developing a federal servicing policies and procedures manual was a recommendation in NASFAA’s Servicing Issues Task Force Report.

As background, the Omnibus includes all 12 different appropriations bills which cover the wide array of the federal government. These bills are supposed to be passed through Congress and signed by the President by October 1, the start of the federal fiscal year. Because Congress was unable to reach agreement in September, Congress passed a continuing resolution, a temporary stop-gap funding measure to bridge the gap and avoid a government shutdown. For more information on the budget process, visit NASFAA’s Federal Budget Process page.

In addition to the spending bill, the bipartisan tax package compromise includes a permanent extension of the American Opportunity Tax Credit, which allows students and families to claim up to $2,500 per year for college expenses, and a one-year extension of the above-the-line deduction for tuition and related expenses. The deduction is capped at $4,000 for an individual whose adjusted gross income (AGI) does not exceed $65,000 ($130,000 for joint filers) or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers), according to a fact sheet.

The tax package is slated to come before the House of Representatives on Thursday and the Omnibus will follow on Friday before both bills travel to the Senate for consideration before the holiday recess.

*This article was updated on February 1, 2016 to reflect the Department of Education's formal January 29 announcement that the Pell grant maximum award for the 2016-17 Award Year will only be $5,815.*


Publication Date: 1/6/2016

Teresa J | 1/6/2016 12:48:54 PM

Why can't they have the Pell award be an even number?

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