2012 Budget Blueprint Released, Cuts Proposed to 2011 Budget
Secretary of Education Arne Duncan stated that in 2012, maintaining the $5,550 maximum Pell award would result in a $20 billion shortfall in Pell grant funding. The discretionary costs for Pell grants have more than doubled since 2008 due to demographic changes and increases in the number of eligible students, increases in the maximum award, “Second Pell” (multiple Pell awards for students who attend year-round to accelerate graduation) and need analysis changes that enable many students to qualify for larger awards (such as Auto-Zero).
To offset the PELL shortfall, ED proposes an increase of discretionary Pell funds by $5.4 billion and:
- Suspending the “Second Pell” program with proposed effect in 2011-2012 school year.
- Eliminating in-school loan subsidies for graduate and professional students with proposed effect in 2012-2013 school year.
- Allowing borrowers with split loans to simplify servicing by converting FFELP loans to DL servicing during the period of January 1, 2010 to September 30, 2012.
- Protecting and expanding the Perkins Loan program by turning it into a Direct Loan Program and increasing the interest rate from 5% to 6.8%.
The President’s budget request includes no recommended increases to the Supplemental Education Opportunity Grants (SEOG) program and eliminates funding for the Leveraging Education Assistance Partnerships (LEAP) program.
The next step in the budget process is for the House and Senate Budget Committees to independently consider and mark up the proposal. By law, the Senate committee is required to report its version of the budget by April 1. The House is not required to meet this deadline, but generally releases its budget markup after the Senate version is released.
The House and Senate will then work together to craft a joint budget proposal. Both the House and Senate must pass the joint budget resolution with majority vote. After approval of the budget resolution, the actual funding levels for government programs are debated and set by the appropriation subcommittees, who also develop detailed spending instructions for those agencies. Congress is charged to complete the measures by October 1 - the beginning of the federal fiscal year - but this doesn’t always happen. In those instances, Congress must approve a short-term continuing resolution, combine any outstanding spending measures into an omnibus spending bill, or implement a government shutdown.
House Republicans are still working through the 2011 Budget and have proposed an $845 reduction in the maximum Pell grant in a continuing resolution crafted to fund the federal government through the 2011 fiscal year. This will reduce the maximum Pell award from $5,550 to $4,705. The proposed bill would also eliminate all funding for the SEOG program ($758 million) and reduce funding for both GEAR-UP and TRIO (by $19.8 million and $24.9 million respectively).
The Republican proposal decreases the Obama administration’s 2011 budget submission by $100 billion and eliminates all earmarks made by members of Congress. The House is expected to discuss the proposal this week; however, if the proposal is passed, it may meet opposition from the Senate, the White House or both.
On March 4, the current continuing resolution expires and Congress must either pass additional funding legislation or face a shutdown of the federal government, the last of which occurred in 1995.
We’ll continue to keep you informed about new developments regarding the 2012 budget and proposed 2011 budget cuts. Visit our Legislation Page to view new documents as they become available.