"Drastic Cuts" to ED in President Trump's Budget Proposal

May 23, 2017

By Carrie Warick, Director of Policy and Advocacy

President Donald Trump's first full fiscal year 2018 budget proposal, released today, includes drastic cuts to the U.S. Department of Education (ED): $10.6 billion in reductions to federal education initiatives. Once accounting for money going into new programs, these cuts are a net $9.2 billion, or 13.6 percent of ED’s budget. The portion of the cuts directed at federal student aid are both wide and deep. If Congress chooses to pass this budget proposal, the impact on our students will be immediate. While it is unlikely that Congress will implement this budget as written, ending any one of the aid programs proposed for elimination would mean fewer low-income students would be able to afford college.

Program eliminations:

  • Subsidized Stafford Loans (all loans would be unsubsidized)
  • Supplementary Educational Opportunity Grants
  • All income-driven repayment plans (to be replaced with one plan)
  • Public Service Loan Forgiveness (with a grandfathering provision for current borrowers)
  • Corporation for National and Community Service, including AmeriCorps
  • Perkins Loan Program (would expire)

Program reductions:

  • Pell Grant reserve fund ($3.9 billion in cuts)
  • Pell Grant inflationary adjustment eliminated 
  • Federal Work-Study ($487 million cut – almost half of all funding)
  • TRIO Programs (10 percent cut)
  • GEAR UP (33 percent cut)

The programs proposed for dramatic reductions or eliminations are all important building blocks that help our low-income, first-generation and students of color access and complete a higher education. For these students, every dollar counts when piecing together a financial aid package. Cutting away at some or any sources of funding will make it more difficult for already underserved students to piece together an affordable financial aid package.

The president’s budget proposal maintains the year-round Pell Grant restoration made permanent in Congress’ budget deal for fiscal year 2017, meaning that component does not require Congressional approval. However, the proposal does not extend existing automatic increases (known as inflationary adjustments) to the grants. While the return of year-round Pell will be a great benefit to students – most likely starting in summer 2018 – if lawmakers do not also take action to extend automatic adjustments and increase the maximum Pell Grant award annually, its purchasing power will continue to decline.  

On the student loan front, the president's recommends eliminating the in-school subsidy on federal Stafford Loans, eliminating Public Service Loan Forgiveness, allowing the Perkins Loan Program to sunset, and making several changes to the income-driven repayment plans available for students who need assistance repaying their student loans. These changes together represent a savings of $143 billion over the next decade.

Specifically on income-driven student loan repayment, the president seeks to combine all existing plans for undergraduates into one new plan. It would be for new borrowers only, setting the maximum repayment rate at 12.5 percent of discretionary income over 15 years. In addition to those changes for undergraduates, borrowers with graduate degrees would have less generous repayment terms under the president’s proposal for income-driven repayment. He recommends that they also pay 12.5 percent of their income, but over 30 years, rather than the current 10 percent over 25 years. These changes represent $76 billion of the cuts to student loan programs. All students could be worse off, or some undergraduates may benefit. NCAN will share analysis of what this means for both monthly payments and the overall debt forgiveness level as the impacts of these changes are analyzed. 

Government-funded college access programs are also targeted for significant cuts. GEAR UP programs face a 33-percent reduction, with a focus on funding ongoing grants until an evaluation of the program is completed. TRIO Programs are slated for a 10-percent funding reduction, apparently targeted at the Robert E. McNair Postbaccalaureate Achievement Program (which supports students seeking advanced degrees) and Educational Opportunity Centers (which serve adults returning to higher education). White House Budget Director Mick Mulvaney also cited these programs as not effective, while stating that others such as Upward Bound, Talent Search, and Student Support Services are achieving their goals. 

Two of these cuts are significant not just for individual students but for NCAN member program operations. More than two dozen NCAN members, some serving thousands of students nationwide, use AmeriCorps grants to provide low-income, first-generation and students of color with near-peer college advisors in their high schools. In addition to providing public service, one appeal for recent grads to enter AmeriCorps is the opportunity for funding toward graduate school or undergraduate debt relief. The elimination of AmeriCorps threatens the ability of several NCAN members to provide wide-scale college access services to their students. Additionally, Public Service Loan Forgiveness is an important benefit for staff members of college access programs. Eliminating this program will make it more difficult for non-profit employees to repay their loans and may make it harder to recruit qualified staff members.

This proposed budget is devastating for our students; however, it is highly unlikely that it will be passed into law in this form. Congress must consider its own budget resolutions, which are then used to direct the appropriations process. This appropriations process determines the final funding for the programs that are crucial to our students’ success. Today’s budget release is the president’s opening volley in what will be a very long conversation about the final funding for the federal government for fiscal year 2018, which begins Oct. 1. It is likely that this conversation does not come to resolution until the end of September, and possibly later.

For those who want to take immediate lobbying action to encourage opposition to these cuts, use our website to contact your elected officials and let them know that broad and deep cuts to federal student aid are unacceptable to your or your organization. Also, be prepared for many additional opportunities to speak out to elected officials on specific funding elements as we learn more details about how Congress intends to implement – or ignore – this funding request.

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