What President Trump’s New Budget Plan Would Do to Graduate Education

The White House released its fiscal year (FY) 2021 budget proposal this week, outlining President Donald Trump’s key priorities and funding goals for the upcoming fiscal year. The president’s budget blueprint serves as guidance to Congress as lawmakers begin charting federal budget allocations for FY 2021. AccessLex released a statement strongly opposing several areas of the budget plan because they would harm students and make higher education less affordable and accessible. While the Trump administration’s new budget proposal isn’t largely dissimilar to what it requested last year, there are several notable provisions related to higher education.

Overall, President Trump’s budget blueprint makes severe cuts to education:

• $66.6 billion is allocated to the Department of Education for FY 2021.
• This represents a $5.6 billion or 7.8 percent cut in discretionary spending from the 2020 enacted level.
• Funding for all higher education student loans is cut by over $5 billion next year and 190.8 billion over ten years.

Restrictions on lending for graduate education:

• Graduate student borrowing is capped at $50,000 per year with a $100,000 aggregate limit.
• Provide financial aid administrators greater latitude to limit “excessive” loan borrowing.
• Allow schools to condition students’ loan disbursements on the annual completion of mandatory loan counseling.

Elimination of Public Service Loan Forgiveness (PSLF):

• The PSLF program, which is designed to encourage careers in public service by providing conditioned debt relief to borrowers, is eliminated.

Significant changes to Income-Driven Repayment (IDR) plans:

• Five IDR plans will be consolidated into one plan – the Single IDR plan – with borrowers’ monthly payment cap increased from 10 percent to 12.5 percent of discretionary income.
• The limits to monthly IDR payments at the standard 10-year plan level are eliminated.
• The amount of time required to be eligible for repayment forgiveness is increased from 25 years to 30 years for graduate borrowers.
• Married borrowers that choose to file taxes separately would be required to make monthly payments based on combined household income.
• Severely delinquent borrowers will be automatically enrolled in the Single IDR plan.

Explores changing the Office of Federal Student Aid (FSA) into a separate entity:

• Congress is required to evaluate reorganizing FSA into a standalone entity, entirely separate from the Department of Education.

Depletes campus-based aid opportunities:

• The Federal Work-Study program, which is intended to encourage workforce opportunities on campus and off, is slashed by more than half.
• Graduate students would no longer be eligible.

Increase institutional accountability:

• Postsecondary institutions accepting taxpayer funds would be required to “share a portion of the financial responsibility associated with student loans.” No details were provided and the Trump administration intends to work with Congress on the issue.

Traditionally, the next step in the process is for the House and Senate to pass a budget resolution which sets spending and revenue targets to use as they go forward with the annual appropriations process. However, last year Congress passed a two-year deal on spending levels and leaders from both chambers have signaled they are likely to adhere to those targets instead of passing a brand new budget resolution during a presidential election year. The deadline for Congress to pass all twelve appropriations bills and have them signed by the president is September 30, 2020.