President Biden’s Budget Would Ease Student Debt Burden for Borrowers
The Biden-Harris Administration officially kicked off the Fiscal Year (FY) 2023 budget season this week when it released the President’s annual budget blueprint. The proposal outlines the Administration’s key priorities and funding goals for the coming fiscal year. While annual budget proposals are not binding, they do serve as guidance for Congress as they decide how to allocate federal funding during the upcoming appropriations process.
Overall, the budget requests $88.3 billion in discretionary funding for the Department of Education, which represents a 15 percent increase from FY 2022 levels. AccessLex Institute released a statement in support of the Administration’s FY 2023 budget proposal, praising it for making new and critical investments in higher education. Specifically, the budget makes significant strides to increase funding for Historically Black Colleges and Universities (HBCUs) and Minority-Serving Institutions (MSIs), expand the Pell Grant award, and deliver targeted assistance to student borrowers to help ease the burden of student loan debt. Below is a breakdown of how the budget would impact some specific areas critical to higher education and student aid.
Boosts Title III funding for HBCUs and MSIs
- The budget includes a $752 million funding increase to enhance institutional capacity, expand research, and develop infrastructure for HBCUs, MSIs, and other low-resourced institutions.
- Specifically, the proposal devotes $402 million to the Strengthening Historically Black Universities program, which is a $65 million increase from last year.
- It also proposes $102 million for the Strengthening Historically Black Graduate Institutions program, which supports law, medical and other graduate programs. This represents a $15 million increase from last year.
Ensures borrowers won’t have to pay taxes for student debt forgiveness
- The proposal would make permanent a provision included in the American Rescue Plan Act which prohibits any tax obligation for federal student loan forgiveness – it also would extend this benefit to private student loans.
Enhances investment in services for student loan borrowers
- The blueprint devotes $2.7 billion to the Department of Education’s Office of Federal Student Aid – a 43 percent increase from the prior year’s enacted level --to update technology and enhance customer service for borrowers.
- Funds would be used to implement the FAFSA Simplification Act and the FUTURE Act, which simplify and improve the financial aid process.
- The proposal also outlines improvements to the Public Service Loan Forgiveness (PSLF) program, such as the limited waiver, a new reconsideration process, and updating the employer database.
Commits to improving student aid programs
- While no specifics were given, the Administration says that it will work with Congress to improve the PSLF program and income-driven repayment plans during the reauthorization of the Higher Education Act.
Charts a path to double Pell
- The budget outline aims to double the maximum Pell Grant by 2029, starting by immediately raising the maximum award to $8,670 for the 2023-2024 school year – a $2,175 increase over the current level.
Looking ahead, both chambers of Congress will now work to pass a budget resolution – essentially an agreement used to establish federal spending, revenue, deficits, and debt targets during the annual appropriations process Congress will undertake soon.