On Tuesday, May 23, the Trump administration released its fiscal year (FY) 2018 budget. Like the FY 2018 “skinny” budget outline released on March 16, the full proposal reflects President Trump’s intention to increase defense spending by 10 percent—or $54 billion—and offset those increases by cutting discretionary spending by a similar amount.
Cuts to the discretionary areas of the federal budget include many agencies and programs that will affect higher education, including spending on federal financial aid programs, student loan repayment programs, and scientific research.
Key elements of the President’s budget which impact higher education include:
Department of Education
The proposed FY 2018 budget includes a reduction of $9.2 billion for the Department of Education, cutting its budget by 13.6 percent from the level Congress approved last month. These cuts include:
- Maintaining support for the Pell Grant program and allowing students to use the grant for three semesters per year; this was a key provision of the recent congressional budget deal known as year-round Pell. However, this budget proposal reduces the program’s current $10.6 billion surplus by $3.9 billion. Reducing the surplus could jeopardize the long-term sustainability of funding for the Pell Grant. It also proposes to maintain the maximum award at $5,920 and does not extend indexing of the maximum award to inflation, worrying stakeholders that the grant would lose its purchasing power in the future.
- Eliminating funding for Supplemental Educational Opportunity Grants (SEOG) - the budget proposal states that SEOG is a less targeted way to deliver need-based aid than the Pell Grant program. SEOG provides aid to low-income students.
- Eliminating new subsidized loans, which do not accrue interest until at least six months after a student leaves college. The proposal allows one subsidized loan program, the $700 million Perkins Loan, to expire, and eliminates the subsidized undergraduate loan program for new borrowers.
- Eliminating the 2007 Public Service Loan Forgiveness Program, which clears the remaining debt of those who work in qualifying government or nonprofit sectors and make 120 certified payments (or ten years’ worth of payments) towards their debt. It is unclear whether those currently in public service who have been making the qualifying payments would be affected by this cut.
- Consolidating five income-based repayment plans into a single repayment plan, as promoted by President Trump during his campaign. This new plan raises borrowers' monthly payments to 12.5 percent of their income and shortens the payment period for undergraduates to 15 years, after which the remainder of debt is eliminated. Graduate students face a much longer window under this new plan, with debt forgiven after 30 years of making income-based repayments.
- Reducing funding for federal work-study by $490 million (down roughly 50 percent) as well as making cuts to funding for GEAR-UP (down nearly 36 percent) and TRIO (down nearly 15 percent) – programs that are dedicated to increasing the number of low-income students prepared to enter and succeed in postsecondary education.
- Maintaining funding for Historically Black Colleges and Universities and Minority Serving Institutions at $492 million. Funds for Hispanic Serving Institutions are maintained in the same fashion.
- Eliminating funding for International Education. The budget proposes to zero out the Higher Education Act’s International Education programs.
Other Key Agencies
The budget calls for a reduction of $5.8 billion for the National Institutes of Health, including calling for a major reorganization of the NIH’s Institutes and Centers. Such changes could reduce funding for scientific research conducted at colleges and universities across the country. The budget proposal also targets for elimination the National Endowment for the Humanities, National Endowment for the Arts, National Sea Grant College Program, and the Corporation for National and Community Service—which runs AmeriCorps.
In addition to these cuts, the full budget released by the administration introduces an 11.0 percent overall cut to the National Science Foundation, with its research arm cut by 11.1 percent and educational programs related to higher education cut by 13.6 percent.
Lastly, the State Department budget proposal cuts funding for the Fulbright program nearly in half to $125.6 million.
Finalizing the federal budget is a responsibility that lies with the U.S. Congress, and therefore the administration’s budget is presented as a proposal for Congress to consider. It is expected that this budget proposal will face revisions through the legislative processes in the House and Senate.
However, the proposal is a strong indication of the administration’s position and priorities, and requires consideration by board members and administrators as to its potential impact on higher education institutions over the long-term.
AGB stands firm in its opposition to reductions in the federal budget that could harm students or have a detrimental effect on the research and innovation on our campuses. To fulfill its public trust, American higher education must both be accessible to all citizens seeking postsecondary education, and equipped to advance our nation through innovation and discovery. We must seek every avenue to help our students attend and succeed in college, as well as enhance programs that lead to innovations in areas of scientific research.
AGB is concerned that the proposed cuts to federal financial aid programs will further limit low-income students from accessing the individual and societal benefit of a higher education. We also believe that substantial cuts to research foundations and institutes will hinder universities and colleges from pursuing and producing the very best research that equips our society to face new challenges and adopt innovative solutions to the problems facing the nation and the world.
As Congress works towards its own FY 2018 budget and considers the Trump administration’s proposal, AGB will continue to monitor these issues and keep members posted as necessary.
Questions to Consider
- Is your board informed of the array of federal student aid programs in which your institution participates—such as work-study, SEOG—as well as the number of students on your campus who benefit from these programs?
- What areas of research on your campus receive funding from federal sources, such as the National Institutes of Health, and how might such research activity be impacted by reductions in federal spending?
- Has your board heard from your financial aid office as to how your students may be impacted by changes to federal student aid and student loan repayment programs, and any anticipated impact such changes might have on enrollment?
- How might these proposed reductions impact the ability of your institution to fulfill its mission, especially in the areas of research and student success?
- Should these proposed reductions in federal support ultimately occur, has your institution assessed the financial risk and considered alternative sources of revenue to make up the difference?
- What implications might the proposed cuts to federal work-study have on institutional operations and on-campus employment? What other services or opportunities might your institution be compelled to provide in light of decreased funding for childcare programs serving parent students?
- Has your board considered its own advocacy role related to the proposed budget?
- "What Trump’s Proposed 2018 Budget Would Mean for Higher Ed" – Chronicle of Higher Education – May 23, 2017
- “Overview of Trump’s Budget Plan And Its Impact on Key Departments” – Wall Street Journal – May 23, 2017
- How Does the Budget Process Work? –Tax Policy Center
- Statement by ACE President Molly Corbett Broad on President Trump’s Fiscal Year 2018 Budget – American Council on Education, May 23, 2017
- NAICU President David L. Warren Comments on the Trump Administration’s FY 2018 Budget Proposal – National Association of Independent Colleges and Universities, May 23, 2017
- Harmful to Students and the Nation’s Interest: APLU Statement on Trump Administration’s Fiscal Year 2018 Budget Proposal – Association of Public & Land-Grant Universities, May 23, 2017
- AAU Statement on Administration’s FY18 Budget Proposal – Association of American Universities, May 23, 2017
We welcome questions, comments, and examples of impact from our members. For additional information and to follow AGB’s response to this decision, please contact Tim McDonough, AGB vice president for government and public affairs, at 202.296.8400 or firstname.lastname@example.org.