The 2018 federal budget and you

Hunter Rencis

This past month marked the coming of President Donald Trump’s official 2018 budget proposal on Capitol Hill. To the surprise of few, architect of the spending proposal Mick Mulvaney, from the Office and Management of Budget, laid out a $9.2 billion cut from the Department of Education.

Effectively shrinking federal spending on education by 13.5 percent, the proposed budget delineates the use of those funds to pay for an increase in defense spending by a massive restructuring of student loan programs and grants, according to an article from NPR. Headed by Grand Rapids’ own Betsy DeVos, the Department of Education has recently been a flashpoint for debate surrounding school of choice and DeVos’ advocacy for charter schools. 

Before I delve into what the Department of Education budget decided to cut, and what that means for college students, keep in mind that each presidential budget proposal must make it through both houses of Congress on its way to becoming an official budget, meaning it’s possible that these propositions will be fine-tuned by the congressional budget committees or even expelled from the final rendering of the 2018 budget. However, the president’s initial budget proposal is usually a good indicator of what the administration’s goals are.

If passed as is, the budget would make cuts to the 2018 Department of Education that will specifically affect student borrowers and universities alike. So even if you aren’t one of the 42.3 million student borrowers who received federal student loans last year, if you’re reading this, then chances are you know someone who relies on Pell Grants or other types of federal funding in order to attend college. Under this expected budget proposal, the Department of Education plans to decrease student financial aid available to these types of recipients, including subsidized or unsubsidized federal student loans (FAFSA), Pell Grants and even Federal Work-Study programs, by as much as half, according to an article from The Washington Post.

For those who don’t lean on these types of assistance to attend college, to gain insight as to what this means, one should first consider just how many student borrowers and grant recipients there are who rely on federal spending from the Department of Education budget. According to the Student Debt Report, in 2015 there were more than 43 million borrowers, totaling upward of $1.3 trillion in federal student loan debt nationwide, and that number accounts for about 70 percent of current college students, according to an article from USA Today College. On average, students who graduated in 2015 left school with $16,929 in total debt per student among undergraduates. These figures only account for student loan debt the federal government currently holds, but in fact the highest expenditure from the Department of Education budget in 2015 was spent on Pell Grants for families earning under $40,000, USA Today College reports.

Unlike student loans, federal grants like the Pell Grant do not have to be paid back. These types of federal grants are what will likely affect the most number of students if the budget is confirmed by Congress. For example, 80 percent of students at Texas A&M University rely on federal Pell Grants, and as much as 88 percent of the student body at New Mexico State University does as well. Under the newly proposed budget, what can these students expect next time they apply for federal loans or grants?

Under the White House’s budget proposal, the average recipient of grants like these will receive about $2,500 less, and grants will reach fewer students. As for student borrowers, the proposed budget plans to reorganize its loan structure among unsubsidized student loans, which are already the most expensive.

In the end, these cuts to the Department of Education spending could mean higher interest rates for student borrowers and shorter repayment periods, effectively driving up the cost of college education for all those who rely on federal student loans. House and Senate budget committees will need to pursue major tweaks to the Department of Education spending if students are to expect any debt relief, not to mention what may happen to the 70 percent of college students who currently rely on the Department of Education spending for Pell Grants in order to attend college.