The House Budget Committee released its Fiscal Year (FY) 2018 budget this week. Contained within the budget resolution are reconciliation instructions to the Committee on Education and the Workforce, requesting that it create policy proposals that will save $20 billion over the next decade. The budget committee made very clear it would like to see the education committee create savings by scaling back federal student financial aid programs.
What could this mean for law schools and students? The education committee will craft a bill that seeks to modify or eliminate programs within its jurisdiction that amount to saving $20 billion over the next decade. These proposals could include changing PSLF and Income-Driven Repayment (IDR) plans in some way, such as capping or eliminating PSLF or increasing repayment rates and years to forgiveness for graduate students enrolled in IDR plans. Regardless, any of these proposals will have a negative impact on law students’ efforts to repay their federal student loans. And these changes could become effective as early as the beginning of the next academic year (July 1, 2018).
But the math is a little fuzzy: $20 billon is a lot of money and many programs could be devastated. However, the committee has several priorities across its entire jurisdiction that it may want to modify. Some of the proposals that would hurt law students the most would result in savings far above the $20 billion saving instruction. For example, according to the Congressional Budget Office (CBO), elimination of PSLF would save $24 billion, and making the President’s proposed changes to IDR would result in $52 billion in savings. Nonetheless, the $20 billion saving instruction is a floor, not a ceiling, so the education committee would be well within its purview to suggest massive cuts in those programs.
The education committee could also propose capping PSLF forgiveness at $57,500 and extending IDR forgiveness for graduate students to 30 years. CBO estimates that making these changes would save approximately $19 billion dollars. One or both options could appear alongside other programmatic cuts to reach or exceed the committee’s $20 billion saving instruction. [Note: Technically, CBO scored increasing years to forgiveness from 20 years to 25 years. The savings would likely be similar, albeit probably smaller, with an increase from 25 years to 30 years].
So, what happens next? The education committee will come up with its policy proposals, but after that there are a variety of steps that must be taken for any changes to take effect. We will keep you updated as we learn more, but understand this process could occur very quickly. As we previously stated in our #MakeTheCase webinar, reconciliation is a legislative method that allows bills to pass out of both chambers by a simple majority, placing the fate of these proposals almost entirely in the hands of Republicans.
What does all this mean, and what can I do? Get engaged! These changes could happen very quickly, so reaching out to your members of Congress now could make a difference in whether these policy changes are enacted. We strongly encourage you to watch our #MakeTheCase webinar and visit our advocacy campaign’s website for much more information on how to get involved.