ED CENTRAL: Key Questions on President’s 2016 Education Budget – Higher Education

Career College Central Summary:

  • President Obama released his fiscal year 2016 budget request to congress this week. The Education Policy Program at New America has reviewed the president’s budget and generated a list of key questions that policymakers, the media, stakeholder groups, and the public should ask about the proposals. These are divided into three categories. Those covering Higher Education are below. Those covering PreK-12 will be available here. Those covering Workforce Training will be available here.
  • Income-Based Repayment: The president’s budget includes the same set of proposal to limit benefits in the income-based repayment program (IBR) for student loans that the president included last year. These changes, many of which New America proposed several years ago, would reduce the benefits that graduate students can collect through the program’s loan forgiveness provisions. These changes roll back some of the changes the administration made to IBR in 2010. Specifically, borrowers with larger loan balances would need not qualify for loan forgiveness until 25 years of payments, rather than 20 years under current law; married borrowers could not exclude their spouse’s income from the calculation by filing separate taxes; and Public Service Loan Forgiveness would be capped, not unlimited as is the case under current law. It would also add a new benefit by forgiving half of any unpaid interest each month.
  • Last year, the budget showed that that these changes would reduce the cost of IBR by $627 million per year once fully in place. This year the budget shows $1.5 billion in savings per year. What explains such a large increase in savings from the initial estimate? Did the administration underestimate the degree to which borrowers – mainly graduate students – would benefit from the changes the administration made to IBR in 2010? What new information has come to light?
  • Tuition-Free Community College: The budget documents include additional details of the America’s College Promise program. When it was unveiled a few weeks ago the proposal was described as free community college for all. But the materials released today show that students from families with adjusted gross incomes over $200,000 would not be eligible for the program. While this restriction does better target the program, it also makes it more complicated since it will require some way to verify income and weakens the message of free community college being available for everyone. It also likely makes little difference from a practical standpoint since higher-income students generally do not attend community colleges. Given these complications, why did the administration include the income limitation?

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