The Trump administration is seeking to slash nearly $4 billion in annual funding for student aid programs, but the two-year budget deal signed into law last week complicates that proposal.
President Trump and Education Secretary Betsy DeVos released a fiscal 2019 budget Monday that rehashes many of the proposals floated by the White House last year. Among them are plans to ax loan forgiveness for public servants, alter the terms of income-driven student loan repayment and stop paying the interest on low-income students’ loans while they are in school. Those three changes alone could increase the cost of higher education for borrowers by more than $200 billion over the next decade.
Trump wants to consolidate five income-driven plans into one that shortens the payment period to 15 years for undergraduates but raises the monthly bill to 12.5 percent of income for both undergraduates and graduate students. Graduate students, though, would have to pay for longer: 30 years. What’s more, future borrowers would no longer have the option of working as teachers or social workers to receive debt forgiveness after 10 years of loan payments.
The Institute for College Access & Success, a student advocacy group, estimates that under Trump’s income-driven plan, teachers who borrowed for graduate school would pay more than 3 1/2 times the amount required than if they had access to loan forgiveness for public servants.
“At a time when millions of students are struggling under the crushing burden of student debt, it speaks volumes that President Trump and Secretary DeVos are proposing $200 billion in cuts to financial aid,” said Sen. Patty Murray (Wash.), ranking Democrat on the Senate Health, Education, Labor and Pensions Committee, in a statement. “This is a complete 180 from the agreement Republicans and Democrats made last week.”
While the Education Department budget targets many of the programs that were at risk of losing funding last year, some of the proposed cuts are deeper this time.
The Trump administration wants to slash nearly $790 million from the federal work-study programs that help students work their way through college. That is substantially more than the $487 million proposed last year. The administration also wants to change the allocation formula for the program to provide funding based, in part, on a college’s enrollment of Pell recipients. That would shift dollars away from wealthy private universities that receive an outsized portion of funding under the current system.
The two-year budget deal that Trump signed into law last week will spare the work-study program, along with a few others, from such drastic reductions in funding. With the extra money Congress allocated last week, the White House proposed restoring $300 million to the work-study program in an addendum.
The Education Department also walked back plans to gut a college access program. The agency intends to consolidate the TRIO and Gear Up programs, which help disadvantaged students in middle and high schools prepare for college, into a $550 million block grant initiative to be run by states. In light of the congressional budget deal, the department offered up $400 million to bring TRIO’s funding back to its current level of $950 million.
Because of the congressional budget deal, the administration will hold off on taking $1.6 billion from the Pell Grant program’s reserve. The Education Department is proposing to freeze the maximum Pell award to low-income students at $5,920, a ceiling that might remain in place for the foreseeable future without any directive to adjust the award to inflation.
“They aren’t making any of the critical investments in Pell grants, which is a huge missed opportunity,” said Jessica Thompson, policy and research director at the Institute for College Access & Success. “The current max grant is covering the lowest share of college costs in over four decades.”
Trump wants to expand Pell eligibility to low-income students pursuing short-term certificates in fields such as auto mechanics, construction or office management. Students are barred currently from using grant money to pay for academic programs that are shorter than 15 weeks or have fewer than 600 hours of instruction time. Trump has heralded the eligibility expansion as a way to increase the pool of skilled construction workers needed to rebuild the country’s crumbling infrastructure.
Advocacy groups are concerned about how the Education Department will execute the expansion and prevent unscrupulous schools from wasting Pell dollars on worthless credentials. But some higher education experts see an opportunity for the federal government to support a form of higher education that is responsive to the economy.
“Eighty percent of the change in skill requirements comes in tasks and activities in jobs that already exist . . . so you need a system that can do bite-size training,” said Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce. “Workers need support to pay for it to the extent that it’s not paid for by employer tuition assistance.”
He said the Education Department will have to address the accreditation of short-term training programs to ensure quality controls, and use employment and earnings outcomes to measure their effectiveness.
Another proposal generating buzz among policy analysts would give the Internal Revenue Service permission to share tax data with the Education Department. Thompson, policy director at the Institute for College Access & Success, said the proposal could reduce the burden of annually submitting earnings documentation to stay in an income-driven repayment plan. She is also encouraged by a proposal to automatically enroll people who are severely behind on their loan payments in an income-driven plan.
Those two changes, which mirror a bill introduced by Reps. Suzanne Bonamici (D-Ore.) and Ryan Costello (R-Pa.), could help struggling borrowers avoid default, Thompson said.
Jason Delisle, a resident fellow at the conservative think tank American Enterprise Institute, argues that automatic enrollment presents logistical hurdles for the Education Department, including getting borrowers to consent and making sure earnings information is accurate. Even if those hurdles are cleared, assuming people are not going to default is a big leap, he said.
Though Congress did not embrace many of the cuts DeVos proposed in her first budget last year, there is still a good chance some of the items on her wish list could make it into legislation to reauthorize the Higher Education Act. Many of her budget priorities for higher education are in the House GOP higher education bill, though in some cases the congressional legislation is a bit more aggressive. The forthcoming Senate version of the reauthorization bill could be less partisan than what Republicans presented in the House, and take a more measured approach to student aid programs than the Trump administration.