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How the GOP House budget takes aim at funding for college students

Senate Majority Leader Mitch McConnell of Ky. speaks to reporters on Capitol Hill in Washington, Tuesday, May 5, 2015. , following a policy luncheon. From left are, Sen. Roger Wicker, R-Miss., Sen. John Barrasso, R-Wyo., McConnell and Senate Majority Leader John Cornyn of Texas. (AP Photo/Brett Carlsen)
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Senate Republicans passed a budget on Tuesday that would roll back or eliminate a series of federal programs aimed at making college more affordable and student debt more manageable.

Republicans praised the adoption of the first joint budget resolution in five years, a plan that calls for balancing the budget in 10 years by cutting more than $5 trillion from spending. The resolution is unlikely to get enough Democratic support to clear the Senate, but it sends strong signals that Republicans are taking aim at higher education initiatives.

Tucked into the spending plan is the elimination of guaranteed funding for Pell Grants, which provide money for the country's poorest students to attend college. Under the Republican plan, it would be up to Congress' discretion to fund the program every year, leaving families vulnerable to future budget cuts.

Nine million students participated in the $33.7 billion Pell Grant program in the 2013-2014 school year. Although the program is currently running a surplus, that is expected to dry up by 2017. Even at its current level, with maximum awards topping $5,775 per school year, Pell barely covers a third of the cost of college, according to the the Institute for the College Access and Success (TICAS).

The way it works now, a portion of the funding for Pell is mandatory and another portion is discretionary. If the mandatory money is cut, there is no guarantee that Congress would use its discretion to pick up the costs, which could result in the maximum award declining by 15 percent, according to the Committee for Education Funding, an advocacy group.

There is no explicit language in the budget resolution calling for cuts to other higher education programs, but there is a broad reduction of mandatory spending that will impact such programs. And House Republicans have made it clear which ones they have in mind.

During a budget markup in March, Republican Budget Committee Policy Director Jane Lee said the budget assumes savings from the end of the in-school interest subsidy on student loans, the repeal of the expansion of an income-driven repayment program and the elimination of public-sector loan forgiveness.

Lower income students would be squeezed by the end of subsidized Stafford loans, on which the government pays the interest while the borrower is in school. The Education Department estimates that as of the end of December over 28 million borrowers received these loans.

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The resolution also calls for the reversal of President Obama's expansion of a student loan program that caps a borrower's monthly bill at 10 percent of income and forgives the debt after 20 years of payment.

That income-driven plan, known as Pay As You Earn (PAYE), is part of a suite of repayment options that's supposed to prevent borrowers from defaulting on their loans, a problem faced by about 20 percent of people repaying college debt. It has taken a while for borrowers to warm up to these plans, mainly because so few have known of their existence. But the number of people enrolled in the programs in December increased 71 percent from the same time a year earlier, according to the Education Department. Now more than 2 million borrowers are enrolled.

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An analysis by TICAS concludes that the Republican budget could double the student loan payments of borrowers enrolling in PAYE. If someone owing $29,000 in federal student loans and earning $35,000 a year enrolled in the program, for example, that person's initial payment could increase from $145 a month under the current program to $217 a month under the reduced program.

"Students today are graduating with much more debt. I worry that young people now owe so much money when they graduate that they don’t have the option to take risks,” Sen. Mark Warner (D-Va.) said in an e-mail. "Income-based repayment is critical for making student debt just a little more manageable for grads and their families. Why would we want to limit those options?"

The budget resolution also calls on lawmakers to get rid of Public Service Loan Forgiveness, which forgives any remaining student loan debt for borrowers who work in the public sector for 10 years. Advocacy groups have argued that the program, created in 2007, is an incentive for students to pursue careers, like public interest law or teaching, that serve the public but may not earn a lot of money. According to the Education Department, some 600,000 borrowers could qualify for the public sector program through fiscal year 2025.

Keep in mind that members of the appropriations committees don't have to follow the budget plan, but they may have to find savings in other programs if they reject the proposed cuts.

"The savings...are not specified because it will be up to the authorizing committees to do the legislative work. This balanced budget just provides a fiscal blueprint for future legislative action,” said Joe Brenckle, a spokesman for the Senate Budget Committee.

Even if the Republicans get through the committee process, it's unlikely that the spending bills will pass the Senate, where the party will need at least six Democrats to bring the bills up for a vote.