On Monday the White House released its budget proposal for Fiscal Year 2019, which begins this coming October. The prospective budget is similar to HR 4508, the “Promoting Real Opportunity, Success, and Prosperity through Education Reform” (PROSPER) Act. This is a bill designed to revamp federal higher education programs. It will soon to be debated in the House.
If your student is now or likely will be a federal financial aid recipient, contact your U.S. Representatives and Senators to let them know your thoughts on the proposed budget and HB 4508. Why? If Congress passes either as written, several federal student aid programs would be reduced or eliminated.
Subsidized Federal Direct Loans: Currently, no interest is charged on these loans until six months after their undergraduate borrowers leave college. But they would end for those first borrowing on or after July 1, 2019. Even at current interest rates, which are expected to rise, this would increase the cost of borrowing the $27,000 maximum allowed over 4 academic years by at least $2,800.
Income-Driven Repayment: Four repayment options would be replaced by one repayment plan requiring ex-students to pay 12.5%, instead of the current 10%, of their discretionary income toward their federal college debts. The repayment period would last 15 years instead of 20 to 30 years for undergraduates, and 30 years for graduate students. Discretionary income is the amount a borrower’s income exceeds 150% of poverty-level.
Public Service Loan Forgiveness (PSLF): Any student first borrowing a federal loan on/after July 1, 2019 would be ineligible for PSLF.
Federal College Work-Study (FCWS): The budget would reduce FCWS funding by 49.5%. FCWS currently helps over 630 thousand students earn more than $1 billion a year to pay college costs. Graduate students would become ineligible for FCWS.
Federal Pell Grants: College costs keep rising, but the budget proposes to limit Pell Grants to the same amount as in FY 2019 as this year.
Pell Grant eligibility would be extended to students in short-term programs providing certificates, licenses, or other credentials for “in-demand fields”. For-profit vocational schools usually offer such programs, but their certificate earners average 1.5% higher unemployment rates, 11% lower earnings, and $5,000 more in student debt than students earning similar certificates at community colleges.
Federal Supplemental Education Opportunity Grants (FSEOGs): The FSEOG program, which provides extra grant dollars to approximately one million of the nation’s neediest Pell Grant recipients, would be eliminated.
Contact College Affordability Solutions at (512) 366-5354 or email@example.com for a no-cost consultation you have questions about how to pay for college.