The Biden-Harris Administration’s Budget Proposal Asks Congress to Consider a Holistic Approach to Funding Higher Education

On March 11th, the Biden-Harris Administration released its annual budget proposal which outlines its priority areas and funding goals for fiscal year 2025 (FY25). While the budget proposal is not law, it serves as a guide for Congress while they strategize forthcoming FY25 appropriations bills.

Overall, the administration requested $82.4 billion in funding for the Department of Education (ED), which includes a $3.1 billion (four percent) increase from the 2024 enacted level. This budget increase includes the administration's call to eliminate origination fees on all federal student loans and further invest in minority-serving institutions (MSIs), federal financial aid infrastructure, and campus-based childcare. Below is a breakdown of these requests and how they would impact higher education.

Reduce Student Debt by Eliminating Origination Fees

An origination fee is the percentage of a loan that the government deducts to offset the expenses of processing a loan. Currently, borrowers must pay back the full loan amount, including the origination fee, rather than the amount they received, with interest. To reduce student loan debt and lower the cost of college, the administration requested the elimination of origination fees for all federal student loans.

Mitigate Inequity by Investing in Minority-Serving Institutions

Investing in MSIs has been an ongoing priority for the Biden-Harris Administration. As these institutions serve high proportions of students of color yet are historically underfunded, leveling the funding playing field is essential to remedying educational inequities. Since taking office, each of the administration's budget proposals has aimed to increase funding to these institutions in historic ways. For FY25, the administration requested:

• Two years of subsidized tuition of up to $4,500 per year for students from families earning less than $125,000 enrolled in four-year Historically Black Colleges and Universities (HBCUs), Tribally Controlled Colleges and Universities (TCCUs), and Minority-Serving Institutions.
• $1 billion to expand capacity at HBCUs, TCCUs, and MSIs, reflecting a $81 million increase from the FY24 enacted level.

Improve Services for Borrowers by Investing in Financial Aid Infrastructure

Over the past year, our nation’s federal financial aid infrastructure has become overwhelmed due to complications with the new Free Application for Federal Student Aid (FAFSA) and the return to student loan repayment. As a result, many students and borrowers have found it challenging to navigate the financial aid system. To help the Office of Federal Student Aid (FSA) improve its services, the Biden-Harris Administration requested $2.7 billion for the office, reflecting a $625 million increase from the 2024 enacted level. This funding would aid FSA in modernizing technology, streamlining financial aid programs, and improving student loan servicing.  

Increase Support for Student-Parents by Investing in Campus-Based Childcare Services

Research has indicated that a common obstacle for student-parents pursuing higher education is the lack of affordable and accessible childcare. To help student-parents overcome this barrier, the federal government administers the Child Care Access Means Parents in School (CCAMPIS) grant program. Postsecondary institutions that apply for the grant can use the funds to increase support for campus-based child care services, programs, and initiatives designed for student-parents. For FY25, the Biden-Harris Administration requested $80 million for the CCAMPIS program, reflecting a $5 million increase from the 2024 enacted level.

The next step in the budget process will be for the House and Senate to pass a budget resolution to set the spending and revenue limits they will use during the annual appropriations process.

Read our recent letter to the House Education and the Workforce Committee in support of eliminating origination fees via the College Cost Reduction Act.

Read our 2023 letter to the Senate Committee on Appropriations in support of funding HBCUs, TCCSs, and MSIs.