The National Budget and Education
Posted 06 Mar, 2009
Last week President Obama’s administration revealed the first peek at the 2010 National Budget, which is set to be finalized in April. While many areas of the budget proposal were lacking in details, the education sector received some very specific attention. Here is a brief breakdown of how next year’s budget could effect how families pay for college:
- Changes to the Pell Grant. In an effort to make the Pell Grant more accessable, President Obama’s new budget would make this federal gift aid into an entitlement program (like Social Security) with a minimum level of funding set to increase yearly. I like this provision because currently the Pell Grant program is at the mercy of Congress every year to get funded. Earlier in the decade, for instance, the Pell Grant went six years without getting a raise. If the new terms become law, the size of the maximum grant would rise each year by the same percentage as the Consumer Price Index plus one percent.(1%).
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- Say Goodbye to the FFEL Program. The popular Federal Family Education Loan Program (FFELP), through which private lenders and banks can offer federal loans (like the Stafford loan) would be retired. Instead, effective July 2010, students would have to borrow those loans directly from the federal government. I am sorry to see this provision because it means families will no longer have the opportunity to shop lenders to find the most competitive loan terms.
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- Make the “American Opportunity Tax Credit” Permanent. The new budget would also make the $2,500 education credit included in February’s Stimulus Plan a permanent replacement for the Hope Scholarship. It would also be partially refundable, meaning more lower-income families could access it.
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- Change the Perkins Loan Program. The awarding process for the Perkins Loan, which is offered to low income students, would change, as would the criteria used to qualify awardees. It is estimated that an additional 2.7 million students would qualify for the loan, however interest would begin accruing while the student is in school which would increase the overall borrowing costs for this loan.
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- Create an “Access and Completion” Incentive Program. President Obama’s “Access and Completion” incentive program would set aside $500 million per year (for five years) to reward states and agencies that focus on helping students be more successful in college.
If the plan passes, the combination of these changes could have a great positive impact on how many families fund college. I will continue to look out for future changes to the budget, and will report what ends up in the final version in April!
All the best,
Deborah Fox
Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.
photo: Stars and Stripes by RAWKU5
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Last week President Obama’s administration revealed the first peek at the 2010 National Budget, which is set to be finalized in April. While many areas of the budget proposal were lacking in details, the education sector received some very specific attention. Here is a brief breakdown of how next year’s budget could effect how families pay for college:
- Changes to the Pell Grant. In an effort to make the Pell Grant more accessable, President Obama’s new budget would make this federal gift aid into an entitlement program (like Social Security) with a minimum level of funding set to increase yearly. I like this provision because currently the Pell Grant program is at the mercy of Congress every year to get funded. Earlier in the decade, for instance, the Pell Grant went six years without getting a raise. If the new terms become law, the size of the maximum grant would rise each year by the same percentage as the Consumer Price Index plus one percent.(1%).
. - Say Goodbye to the FFEL Program. The popular Federal Family Education Loan Program (FFELP), through which private lenders and banks can offer federal loans (like the Stafford loan) would be retired. Instead, effective July 2010, students would have to borrow those loans directly from the federal government. I am sorry to see this provision because it means families will no longer have the opportunity to shop lenders to find the most competitive loan terms.
.
- Make the “American Opportunity Tax Credit” Permanent. The new budget would also make the $2,500 education credit included in February’s Stimulus Plan a permanent replacement for the Hope Scholarship. It would also be partially refundable, meaning more lower-income families could access it.
. - Change the Perkins Loan Program. The awarding process for the Perkins Loan, which is offered to low income students, would change, as would the criteria used to qualify awardees. It is estimated that an additional 2.7 million students would qualify for the loan, however interest would begin accruing while the student is in school which would increase the overall borrowing costs for this loan.
. - Create an “Access and Completion” Incentive Program. President Obama’s “Access and Completion” incentive program would set aside $500 million per year (for five years) to reward states and agencies that focus on helping students be more successful in college.
If the plan passes, the combination of these changes could have a great positive impact on how many families fund college. I will continue to look out for future changes to the budget, and will report what ends up in the final version in April!
All the best,
Deborah Fox
Deborah Fox is the founder of Fox College Funding®, a nationwide company that helps families find creative ways to reduce their college costs.
photo: Stars and Stripes by RAWKU5
Subscribe in a reader
Subscribe by Email
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