From Your Lobbyist: House Funding Bill and Student Loan Interest Rates
May 13, 2019
Week of May 6-10
House Proposes Historic Higher Ed Increases in Funding Bill: Last week, House Appropriations Committee marked up and passed the fiscal year 2020 LHHS-Education funding bill and approved all 12 subcommittee spending levels, known as the 302(b) allocations, which include $189.9 billion (6% increase above FY19) for the LHHS-Ed subcommittee. The allocations were approved along party lines with all Democrats in favor and all Republicans rejecting due to the fact that the spending levels do not adhere to the spending caps under the Budget Control Act (BCA) and any bills passed according to these levels will surely be rejected by President Trump.
If the House’s funding bill were to be passed into law, it would fund the Department of Education at $75.992 billion and would make increases to a number of higher education programs. The bill also included significant report language directing the Department of Education to address the pervasive loan servicing and accountability issues regarding the failure to process loan discharges for tens of thousands of defrauded students. Ben Brown, AYA’s founder, issued a statement in support of the bill expressing our gratitude for the House’s investments in hard-working young Americans. Read the full statement here.
Highlights of the higher education funding include:
- Student Financial Assistance: The bill provides $24.9 billion for Federal student aid programs, which is $492 million above the 2019 enacted level and $1.9 billion above the President’s budget request. Of this amount, funding highlights include:
- $6,345 for the maximum Pell Grant, an increase of $150 over the 2019 enacted level and the President’s budget request. The increase will help the maximum award keep pace with inflation.
- $1 billion for the Federal Supplemental Educational Opportunity Grant program, an increase of $188 million above the 2019 enacted level. The President’s budget request proposes to eliminate this program.
- $1.4 billion for Federal Work Study, an increase of $304 million above the 2019 enacted level and $934 million above the President’s budget request.
- Support for Institutions: The bill provides $2.7 billion for higher education programs, an increase of $431 million above the 2019 enacted level and $1.2 billion above the President’s budget request. Within this amount, the bill provides $917 million for Minority Serving Institutions (MSIs) in the Aid for Institutional Development account, including: $375 million for Historically Black Colleges and Universities, $150 million for Hispanic Serving Institutions, and $51 million for Tribally Controlled Colleges and Universities.
It is unclear at this time what the path forward for the LHHS-Ed bill is in the House as no spending deal exists that would preserve the funding levels on which the Committee based this bill. Without a spending caps deal, the funding levels approved for all programs would be lowered dramatically because the Budget Control Act’s much lower funding levels would control. For this reason, it is extremely important that we put pressure on the House and Senate to pass this bill and raise the spending caps. Please take a few minutes to take action on our campaign page here and let your members know you want them to vote YES on this funding bill.
Great news for future student borrowers! Interest Rates Decreasing: Student borrowers attending college in the academic year 2019-2021 will benefit from lower interest rates on loans. Politico reported last week that “the interest rates on new federal student loans are set to drop for the first time in three years following the U.S. Treasury Department’s sale of 10-year notes, the government security to which the rates are tied.” While the new interest rate would not affect current borrowers, it would apply to all new borrowers. The new interest rates for each type of loan are below:
- New undergraduate loans: 4.529%, down from 5.045%.
- Direct loans for graduate loans: 6.079% from 6.595%.
- Federal PLUS loans (graduate student and parent borrowers): 7.079%, down from 7.595%.