Obama's final budget proposal would send billions to higher ed

The Republican-controlled Congress is sure to stymie the plans, already criticizing the spending

In his final budget proposal, President Barack Obama reiterated a number of higher education proposals that Congress has seen — and ignored — before. Among them: two years of free community college and a closing of the 90/10 rule loophole that allows for-profit colleges to collect more than 90% of their tuition revenue from federal sources.

Obama also proposed simplifying the Free Application for Federal Student Aid, or FAFSA, expanding the Pell Grant program, increasing job training opportunities at community and vocational colleges, and opening additional competitive funding for minority-serving institutions.

But how much is likely to become law?

Well, perhaps very little. Republicans, who control both the House and the Senate, barely waited for the president’s budget proposal to be released before condemning it. They criticized him for presenting yet another unbalanced budget and got right to arguing about how their proposal would be better for taxpayers.

“This isn’t even a budget so much as it is a progressive manual for growing the federal government at the expense of hardworking Americans,” said House Speaker Paul Ryan (R-WI).

Free community college

Among Obama's major spending proposals for higher ed is a nearly $61 billion, 10-year commitment to the America’s College Promise program. ACP calls for federal and state governments to split the cost of qualifying students’ first two years of college, either at a community college or a minority-serving institution.

Obama first introduced America’s College Promise in his 2015 state of the union address, highlighting programs in Tennessee and Chicago as models for a federal initiative. Oregon has since approved a statewide promise program and individual colleges, cities, and other states are considering them. At the federal level, there is little support among Republicans to fund the program, and it will likely be ignored once again for the 2017 budget.

Closing regulatory loopholes

The proposed budget recommends closing the loophole that allows for-profit colleges to collect Department of Defense tuition assistance without it counting toward the 90% cap on tuition revenue from federal student aid. It also suggests reducing the cap to 85%. Both proposals would deal a major blow to the for-profit college sector, which overwhelmingly educates low-income students who cannot necessarily front 10% of their college costs  whether they were guaranteed a high-quality education or not.

The 90/10 rule is meant to ensure for-profit colleges do not survive on the government’s money alone and that their students put some skin in the game. Mark Kantrowitz, senior vice president and publisher of Edvisors, has written about the 90/10 rule as measuring each college student population’s ability to pay rather than willingness to pay, however. And, in a 2013 analysis, he found that 98% of revenue at community colleges comes from federal student aid.

“Most public colleges would not be able to comply with the 90/10 rule if it applied to them, especially if state appropriations and grants were included in the percentage of revenue from government aid,” Kantrowitz wrote.

Sen. Lamar Alexander (R-TN), who leads his chamber’s education committee, has spoken out against harsher regulations of for-profit colleges than their nonprofit peers. This argument is one of several sure to be made in support of ignoring Obama’s proposal to alter the 90/10 rule once again.

More aid to minority-serving institutions

Minority-serving institutions, particularly those that serve Latinos, are growing at an increasing pace in the United States, and recent years of flat budget allocations has meant de facto per-student cuts. Obama’s 2017 budget proposal offers $30 million for a new innovation and completion fund competitive grant program, potential funding through America’s College Promise, and 30% set aside in the expanded First in the World competition, which he recommends funding with $100 million.

Money for job training

The budget proposal invests in the American Technical Training Fund to support programs in high-demand fields like healthcare, manufacturing, and IT, the Workforce Innovation and Opportunity Act to create pathways to high-growth jobs, and the American Apprenticeship Initiative to expand such “learn-and-earn” opportunities. With the increasing focus on STEM and vocational education, it could be one of the few higher ed proposals to gain some support.

Simplifying FAFSA

In a nod to one of Alexander’s pet projects, Obama recommends simplifying FAFSA by removing burdensome and complex questions. It likely won't be enough to please the senator, who has advocated cutting the application down to two questions that fit on a postcard, but this portion of the budget is very likely to draw bipartisan support and may actually make it into a final bill.

Increases to Pell Grant funding

Following up on his January proposals to fund the maximum Pell Grant award, offer $300 bonuses for students taking at least 15 credit hours per semester, and providing summer support, Obama included these measures in his 2017 budget proposal. Republicans, however, have previously worked to make cuts in the program.

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Filed Under: Higher Ed Policy & Regulation For-Profit
Top image credit: Chuck Kennedy