4 Reasons College Students Should Be Relieved By The New Spending Bill

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Updated on Friday, March 23, 2018

iStock

Congress passed a $1.3 trillion spending bill in the wee hours Friday to avoid another government shutdown and fund the federal government through the end of September. President Donald Trump signed the bill Friday afternoon after threatening to veto it.

It’s no wonder the President isn’t a fan of the budget — it completely goes against his own education agenda, which included calls to either defund or decrease funding for several education programs targeted at college students.

Instead, Congress’s spending bill includes measures to boost funding for these programs.

Overall, the 2,232-page bill includes about $2 billion in additional spending on higher education across a wide range of programs.

Student advocates call this a win for students.

“While they don’t help current borrowers, [they] will go a long way to help primarily low-income students afford college in the future and hopefully would reduce the amount of borrowing they may need to do,” said Antoinette Flores, a senior policy analyst of Postsecondary Education Policy at American Progress.

Public Service Loan Forgiveness lives on. Notably, the budget provides an additional $350 million in funding to the Public Service Loan Forgiveness program (PSLF). It’s an unexpected boon for the popular program, especially since President Trump’s first two education budget proposals have called on Congress to phase the program out.

3% bump for Pell Grant recipients. In addition to the funding bump for PSLF, Congress also raised the maximum Pell Grant for low-income students by 3% to a total of $6,095 for the 2018-19 academic year. Trump and Education Secretary Betsy DeVos had sought to freeze the program last month in a budget proposal.

Campus-based aid programs get a boost. In addition, appropriators provided modest increases in funding for Campus-Based Aid Programs, including the Supplemental Educational Opportunity Grant ($840 million, a $107 million increase) and Federal Work Study programs ($1.1 billion, a $140 million increase).

Aid for college student parents triples.  Funding for the Child Care Access program that helps student parents pay for child care more than tripled, from $15 million to $50 million, experts say.

“These are peanuts in terms of the federal government’s budget, but that’s a big, big thing for that program,” said Jessica Thompson, policy and research director at The Institute for College Access and Success, a nonprofit organization dedicated to making higher education more available and affordable for Americans.

Public Service Loan Forgiveness lives on (for now)

Although the spending bill gives an extra $350 million to fund PSLF for qualified borrowers, it isn’t a permanent change (the entire spending bill is only good through September).

“It’s just a short one-time funding. And it will be on a first-come, first-serve basis,” Flores said.

Already, there has been much confusion among student loan borrowers who thought they were eligible for PSLF but later found out they did not qualify. A couple of high-profile cases have been reported last year where borrowers thought they were going to receive PSLF, signed up to get forgiveness but found out they weren’t eligible because of their employer or because they did not have the right types of loans needed to qualify. In some cases, their loans did not qualify because they were put into the incorrect repayment plan due to issues with their loan servicers.

The $350 million one-time funding is potentially one way to address this issue, Thompson says.

“[Congress is] attempting to set aside some money to help solve that problem for borrowers who are in that kind of devastating situation where they really did everything right, but for reasons outside of their control, turns out didn’t meet the technical specification of the program,” she said.

The scope of this issue is unknown because the program was implemented in 2007, and the first borrowers became eligible just a few months ago in October 2017.

Pell Grant recipients get a small but significant boost

Currently, about 7.5 million lower-income students are eligible for Pell Grants.

Thompson explained that over the last six years, Pell Grants had an automatic annual inflation adjustment but that expires after this year, and Congress has not moved to continue that. The grant’s purchasing power is relatively low because it’s been around for more than 40 years, and it has not risen to keep up with college cost hikes, Thompson said, but any increase to the Pell Grant helps borrowers.

“The No.1 way that we reduce student loan borrowing is increasing grants,” Thompson said.

In the new budget bill, Congress increased the annual Pell Grant cap by $175 for the 2018-19 academic year, pushing the maximum award up to over $6,000 for the first time.

“It’s a 3% increase, which is modest, but it’s really important,” Thompson said. “The increase will more than offset the loss of the inflation adjustment next year.”

What’s next?

Congress last month passed a budget deal that raised spending caps over the course of the next two years, including $4 billion in funding for higher education.

Experts say the current spending bill is part of that two-year package, and students can assume that the current increase spending levels would be carried forward for at least two years.

But Thompson said she is ultimately concerned about the ongoing Higher Education Act reauthorization process, where the president, education secretary and House Republicans have made proposals to make massive cuts to the federal student loan program, which would affect student loan borrowers in a much bigger way.

“[Congress] has set a really nice example here by prioritizing education spending and saying, ‘You know what? When we have extra resources like this, this is a place where we should be investing, not cutting, not freezing, not gutting,’” Thompson said. “But in the grand scheme of things, we are very focused on the ongoing threat to the federal loan program and to federal loan repayment.”