Highs and Lows of Higher Ed in the White House Budget Request

Blog Post
Feb. 12, 2018

The White House released its fiscal year 2019 budget request to Congress today, and with it pages of particular policy proposals for the Department of Education. In this post, we tackle some of the issues with the biggest implications for higher education policy. To learn more about what’s in the budget request for PreK-12 education, check out this post from our colleagues.

Calls for big cuts mitigated by last-minute budget deal in Congress

The White House released its fiscal year 2019 budget request this morning--and they may have been spared some of the strongest reactions thanks to a budget deal announced by Congress last week. The full budget request calls for an appalling 10.5 percent budget cut--totalling a loss of over $7 billion from education spending across PreK-12 and higher ed. Chief among those was a proposed elimination of the Supplemental Educational Opportunity Grant (SEOG), major cuts to the Federal Work-Study program, and a rob-Peter-to-pay-Paul plan to borrow money from the Pell Grant program’s surplus. But with the budget deal offering a big influx of discretionary funding to both defense and nondefense spending, the White House made some last-minute adjustments through an addendum that details where they’d have spent that extra cash, if they’d known about it sooner. And under the amended version of the budget request, the White House asks for a smaller cut of $3.8 billion, or 5.6 percent compared to last year’s spending. That’s still a significant drop, but many of the higher education-specific cuts would be restored. And since the budget agreement is effectively a done deal, the amended version is--happily for higher ed policymakers--less severe. Unfortunately, the Department takes a big chunk of that money to simply prevent the money-grab from the Pell Grant surplus, rather than providing real, tangible new benefits to borrowers.

Short-term Pell creates long-term concerns

The Department of Education budget request--and, oddly, even the White House infrastructure plan announced today--call on Congress to open new doors to federal aid. Specifically, the Administration wants to permit access to Pell Grants for programs as short as just 8 weeks. Yet significant concerns exist with these programs, and it’s unclear what protections the Department believes are appropriate to ensure short-term programs offer value in the marketplace to their graduates. There’s also a sizeable risk that open access to the $30 billion invested in Pell Grants annually could create incentives for unscrupulous institutions to turn low-value, very-short credentials into a cash cow for schools. The White House’s proposal doesn’t go quite as far as the House Republicans’ Higher Education Act reauthorization bill--which would expand federal aid eligibility to loans as well as Pell Grants--but neither does it detail any specifics for how to prevent wasted taxpayer dollars at low-quality programs that leave students no better off than when they enrolled and having eaten into their lifetime eligibility for Pell Grants. A lot more thoughtful consideration is necessary before Congress throws open the doors to the Pell Grant program.

Driving down defaults with income-driven repayment

Under existing law, there are a whopping five income-driven repayment (IDR) plans, each with its own terms and eligibility requirements. Like last year, the Trump administration has suggested condensing all IDR plans into a single option to cut down on the complexity. But unlike a recent proposal from House Republicans, which would force the lowest-income borrowers to continue paying back their loans well into retirement, the President’s plan for IDR would provide a middle-ground approach--especially for undergraduates. Specifically, the budget request would create a new plan with monthly payments at 12.5 percent of their discretionary income, compared with the 10 percent payments in the most generous plan available now. For those who have only borrowed to cover their undergraduate education, any remaining debt would be forgiven after fifteen years -- five years shorter than today. Those who borrowed any loans to cover graduate school, however, would need to repay their loans under this new income-driven repayment plan for 30 years--a decade-long increase over today’s most generous plan.The plan is intended to better address the needs of those struggling with their monthly payment by maintaining the possibility of forgiveness -- a key provision that the PROSPER Act would all but eliminate. But it will also save a significant amount compared with current law.

Aside from the IDR plan carried over from last year’s budget request, though, the President’s proposal would make two significant changes: first, it would automatically enroll severely delinquent borrowers in this new income-driven repayment plan; and second, it would allow all borrowers in an IDR plan to automatically recertify their income each year. Given the bureaucratic and burdensome nature of recertifying their incomes each year--a process that sheds many struggling borrowers who stand to benefit the most from these benefits--these proposals could help many more borrowers get and stay enrolled in the income-based plans that help keep their payments affordable, especially those most at risk of defaulting on their loans. Congress should consider these proposals. But even without Congressional action, the Department of Education should proceed with creating a multi-year IDR enrollment system, the basis for which is already in place. Collectively, these changes would save the federal government an additional $174 billion over the next decade.

Needed attention to skills, in need of attention to details

It is not a surprise to see some federal workforce programs zeroed out in the name of "rebuilding the Nation's military without increasing the deficit." But the President made a point in the State of the Union to call for more investment in workforce development and job training. That seems to have foretold some of the positive budget developments for programs tailored to do just that. Modifications to the budget request in light of the recent Bipartisan Budget Act of 2018 call for an additional $1.3 billion to the Department of Labor to fund federal workforce programs under the Workforce Innovation and Opportunity Act designed to serve jobseekers and employers across the country.

The Administration also repeats last year’s call for $200 million in new funding to support apprenticeship expansion through the vision laid out by President Trump's 2017 Executive Order on "Expanding Apprenticeships in America." This funding would support grants to scale up “industry-recognized apprenticeships,” but details on what that means remain scant, outside of being among the many priorities for the President’s Task Force on Apprenticeship Expansion to address. Finally, the Administration maintains funding for the Trade Adjustment Assistance program that helps retrain American workers displaced by foreign trade, while calling for needed reforms by refocusing it on work-based learning.  This signal of support for the program makes good sense for an Administration rhetorically focused on workers left behind by globalization, as does prioritizing strategies like apprenticeship that ensure displaced workers can earn a living while they build new skills.  

The Administration also calls for continued investment in Career and Technical Education (CTE) programs, but--interestingly--calls for a comprehensive rewrite of H.R. 2353, last year's proposed reauthorization of the Perkins CTE Act. There are certainly minor changes to the bill that could advance the Administration’s stated goal of better aligning the CTE system and apprenticeship, but it’s seemingly an odd play to call for starting from scratch at a time when there at least appears to be a bipartisan appetite to act on skills in our schools.

Campus-erased aid

On top of the elimination of Subsidized Stafford loans, which provide an interest subsidy for low-income students, the Department proposed to zero out funding for the Supplemental Educational Opportunity Grant (SEOG) -- a campus-based program that targets additional grants to low-income students. The stated reason? That SEOG “is largely duplicative of the Pell Grant program.” Tell that to the student trying to pay his tuition using funding from the two programs. It is true that the outdated formula for these grants targets aid, in many cases, to expensive, elite schools, instead of the institutions that serve the bulk of low-income students. But the Administration didn’t propose to reform the formula--it just proposed to cut money slated for poor students.

While both SEOG and the Federal Work-Study program suffer from the same formula challenges that mean poor targeting, Work-Study wasn’t decimated quite as completely by Administration officials. Instead, it underscores the need for a reform agenda around Work-Study. The budget originally recommended big cuts, taking the program from nearly $990 million down to just $200 million. But with the budget addendum--the extra money Congress allocated to the budget last week and that the Administration accounted for in a separate document today--the Department proposed to restore an extra $300 million of that cut. That takes the fiscal year 2019 request to $500 million, the same as last year. And as we wrote last year, while the Work-Study program is pretty poorly targeted right now, our own recommendations advocated for revisions to the formula for allocating FWS funds and called for better aligning the program with apprenticeship and work-based learning. Still, policymakers will need more detail about the proposed new forms of work-study programming the budget references, including what is meant by "programs that serve multiple students that expose students to or build their preparedness for careers." In reallocating the formula, the Department also shouldn’t propose to cut the aid it provides. A better option? Take a cue from the House Republicans’ HEA reauthorization bill, which would rework the formula to reward schools serving low-income students well and nearly double the funding for it.

Gearing up for changes to TRIO and GEAR UP

Put these college access programs on the list of those the Department would like to collapse because they serve duplicative purposes. The Department would like to rework the $950 million TRIO programs and eliminate the $340 million GEAR UP program to form a new, $550-million state formula grant to conduct college access work with low-income students starting in middle school. (Following the new budget deal, the Department offered up another $400 million, bringing the program to current TRIO levels of $950 million, though still short of the funding for both programs together.) And while the budget proposal says the goal is to support evidence-based activities, it would actually leave it to states to figure out how to allocate the money, including potentially allowing existing grantees to continue receiving preferential treatment, and presumably would ask the states to set an evidence standard for grantees.  Interestingly, the GEAR UP community has lobbied the Department to include evidence and evaluation into the program for years and the Department has refused.  It is now citing a lack of evidence of effectiveness as a reason for eliminating the program.  Without carefully drafted legislative requirements, this proposed program could easily become a block-granted slush fund rather than a rigorously designed, evidence-based support for students. One thing sure to offer new opportunities to build evidence: as with last year’s budget, the Department is asking Congress to remove an existing ban on the rigorous evaluation of TRIO programs, so that it could assess the effectiveness of the programs.  


The President’s Budget Request would also consolidate select Title III and V Minority Serving Institution programs into one institutional formula grant program.  Programs captured by this consolidation include those for Alaska Native and Native Hawaiian-serving Institutions, Predominantly Black Institutions, Asian American and Native American Pacific Islander-serving Institutions, Hispanic-Serving Institutions, Native American Nontribal-serving Institutions, as well as the Promoting Postbaccalaureate Opportunities for Hispanic Americans program. The Strengthening Historically Black Colleges and Universities program, the Strengthening Tribally Controlled Colleges and Universities program, the Strengthening Historically Black Graduate Institutions program, the Strengthening Master’s Degree Programs at HBCUs and the Minority Science and Engineering Improvement Program would not be consolidated under the request. As justification for this consolidation, the Department states that the programs “have similar purposes and redundant activities” and that the individual competitions for these programs are a significant strain on Department staff and resources. But while capacity is certainly a cause for concern with any program, consolidation is not the answer. These programs were statutorily created as individual programs to support diverse populations, interests, and needs. A one-program solution wholly misses this, and instead would lump categories of programs and people under one banner: “minority.”  Yes, the term “minority-serving institution” is often used as a shorthand to describe Title III and V programs, but it was never meant to be the only hand--especially where a government program is concerned.

While consolidating the bulk of the discretionary money available to these programs, it’s not clear how the added money on the mandatory side of the budget would or could be used if consolidation takes place, only adding to the confusion of this proposal. Where will extra mandatory money go if the programs no longer exist? And the Department proposes to eliminate the Strengthening Institutions Program (SIP) altogether, as it did in last year’s request, because it is “duplicative” of other institutional support programs. However, the Department doesn’t say why it chose to eliminate, instead of consolidate, the program. And SIP is designed for schools that serve low-income students and is not focused on any one particular ethnicity. To confuse it with the other institutional support programs is to miss the purpose of this program altogether and to confuse race with low-income status. Moreover, an institution that receives SIP funding is not eligible for funding under a majority of the programs mentioned above. This elimination is also perplexing on top of the proposed elimination of SEOG grants, another program focused on needy students.

All talk and no action on transparency

For a budget that lists “transparency” as one of its HEA reauthorization priorities, it’s odd that it would also defund the Statewide Longitudinal Data Systems (SLDS) program. The SLDS program initially provided funding to states to help them develop data systems to better understand their PreK-12 students’ educational outcomes. But subsequent grant competitions encouraged states to look at higher education and workforce outcomes. As states built up and connected their data systems, ED’s SLDS grants have increasingly focused on technical assistance around key issues like protecting student privacy. But ED thinks these grants are unnecessary and zeros out $32 million.  Maybe states will agree with the Trump Administration that these grants are “no longer necessary” or “not relevant to State and district needs,” but we doubt it. And given that the budget document specifically talks about prioritizing integrated data systems since “the Federal government is in a unique position to leverage the data it already collects for a range of evidence-building activities,” it’s notable that ED doesn’t list repealing the ban on student-level data in its HEA priorities--instead protecting the private higher-ed lobby’s preference to keep the ban.  The College Transparency Act, a bipartisan, bicameral bill that would leverage existing data to create a less burdensome, more comprehensive way to understand how students of all kinds are being served by particular programs at particular institutions, would better accomplish many of the budget’s stated goals.

This budget also falls short of living up to the White House’s lofty rhetoric about “building and using evidence to improve government effectiveness.” For starters, the budget would zero out $54 million for regional education laboratories (RELs), which help states and districts by conducting and disseminating research and providing technical assistance around what is—and isn’t—working in education. One small piece of good news: the White House calls on Congress to tweak the allowable uses of federal financial aid data, which could support new types of cross-agency research.

Ending the partnership with educators

Despite wide, bipartisan agreement, backed by research, that the quality of a school’s teaching and leading are the most significant school factors in promoting students' learning, the Trump Administration has proposed the elimination of almost all programs directly supporting teachers and leaders. The Administration has zeroed out Part A of Title II of the Higher Education Act, which funds the Teacher Quality Partnership program (TQP). TQP competitively funds teacher-preparation programs to partner with high-needs districts with the goal of better meeting students’ needs within these districts. The $43 million program has supported innovations in the teacher preparation field, such as teacher residencies, and provides the opportunity to gain evidence about what works best in a field. And TQP isn’t the only PreK-12 teachers-and-leaders program on the chopping block; click here for more from our PreK-12 experts. 

Related Topics
Higher Education Funding and Financial Aid Federal Education Budget