Policy Papers: Federal Education Budget Project

Rethinking the Middleman

Education Policy — Mon, 13 Jul 2009 01:00:00 -0400

Each year, the federal government guarantees billions of dollars in loans disbursed through the Federal Family Education Loan (FFEL) Program, a public-private partnership that provides financial aid to students attending institutions of higher education. Despite the significant investment of taxpayer dollars, the actual administration of the FFEL Program is largely handled by participating lenders and a group of 35 non-federal guaranty agencies across the country. Guaranty agencies perform a number of administrative functions, such as disbursing federal default insurance provided to private lenders issuing FFEL loans, preventing loan default, and collecting or rehabilitating loans that borrowers have failed to repay.

Playing Fair: The Need for Teacher Equity in Low Income Schools

Education Policy — Mon, 08 Jun 2009 08:12:00 -0400

On Monday, June 8, the New America Foundation's Federal Education Budget Project released "Equitable Resources in Low Income Schools: Teacher Equity and the Federal Title I Comparability Requirement" at an event on Capitol Hill. This event featured representatives from the White House, Representative George Miller's committee staff, and the National Education Association to discuss teacher equity and the comparability requirement in the law. Education Policy Program MaryEllen McGuire introduced the issue using this PowerPoint presentation.

Equitable Resources in Low Income Schools

Education Policy — Mon, 08 Jun 2009 05:44:00 -0400

Teachers with the least experience and fewest credentials teach in our poorest schools, putting low-income students at a disadvantage. School finance disparities in teacher spending within school districts are a major cause of this problem. However, school district budgeting techniques mask these intra-district disparities, allowing administrators and policymakers to ignore them.

Student Loan Purchase Programs Under the Ensuring Continued Access to Student Loans Act of 2008

Education Policy — Wed, 27 May 2009 13:19:00 -0400

Summary and Analysis of President Obama’s Education Budget Request

Education Policy — Mon, 11 May 2009 02:04:00 -0400

President Barack Obama submitted his first budget request to Congress on May 7, 2009. This request follows the initial summary budget request he submitted in February that included only aggregate funding levels for federal programs and agencies.

Key Questions on the Obama Administration’s 2010 Education Budget

Education Policy — Tue, 05 May 2009 00:05:00 -0400

President Barack Obama submitted his first budget request to Congress on Thursday, May 7, 2009. This request follows the initial summary budget request he submitted in February that included only proposed funding levels for federal programs and agencies in aggregate. The detailed budget request includes proposed funding levels for federal programs and agencies in aggregate for the upcoming five to ten fiscal years, and specific fiscal year 2010 funding levels for programs subject to appropriations. The president's 2010 budget request marks the first time the Obama administration has submitted funding recommendations for every federal education program and a comprehensive list of new education policy initiatives.

10 Ideas to Ensure College Readiness in the No Child Left Behind & Higher Education Acts

Education Policy — Mon, 27 Apr 2009 17:53:00 -0400

It is a stark, indisputable fact that many of America's high school graduates are not ready for the rigors of college. Fewer than half of the high school juniors and seniors who took the ACT national college admissions test in 2008 met its college readiness benchmark in mathematics.^[1] Of the 40,000 freshmen admitted into the California State University system in 2007, more than 60 percent needed remediation in English or math.^[2] Nationwide, nearly a third of all incoming freshmen—42 percent of first-year students at public two-year colleges—require remediation.^[3]

A Primer on the 2009 Budget Resolution’s Impact on Education Funding

Education Policy — Sun, 15 Mar 2009 11:07:00 -0400

The budget resolution put forward by Congress each year sets out a budget plan for the next five to ten years. The budget resolution and the ensuing budget process itself can have significant effects on education funding. The arcane procedures Congress uses to produce and act upon the budget resolution, however, are often confusing to the media and education advocates alike. This confusion is made worse by political rhetoric and partisan spin.

2009 Education Appropriations Guide

Education Policy — Thu, 12 Mar 2009 17:42:00 -0400

Congress completed the fiscal year 2009 appropriations process on March 10th, 2009, finalizing annual funding for nearly all federal education programs through September 2009 at $62.6 billion, up $3.4 billion from the prior year. Making sense of the federal education budget and the appropriations process can be a frustrating task for education advocates, state and local policymakers, the media, and the public. The now concluded fiscal year 2009 appropriations process is no exception due to numerous stopgap funding measures and emergency economic stimulus legislation.

Bridging the Gap

Education Policy — Thu, 29 Jan 2009 09:16:00 -0500

Far too many students leave high school unprepared for the rigors of college and the workplace. Nearly a third of all incoming freshmen- 42 percent of first-year students at public two-year colleges-require remediation. At some postsecondary institutions, more than 90 percent of first-time freshmen need to take remedial classes before enrolling in courses that count toward their degrees. Remedial courses are offered at 99 percent of public two-year colleges and more than 75 percent of public four-year institutions.

Student Loan Purchase Programs Under the Ensuring Continued Access to Student Loans Act of 2008

Education Policy — Thu, 15 Jan 2009 17:05:00 -0500

An updated version of this paper can be found here.

In May of 2008, Congress passed the Ensuring Continued Access to Student Loans Act (ECASLA) in response to concern that credit market conditions could disrupt federal student loan availability. The law gives the U.S. Department of Education temporary authority to purchase federally backed student loans made by private lenders, effectively providing a secondary market for the loans. Congress opted to leave the new purchase authority largely undefined in statute, giving the Department considerable discretion to design and administer it. To date, the Department has created four separate loan purchase arrangements under ECASLA: a put option; a short-term purchase program; a financing arrangement; and an asset-backed commercial paper support program. This issue brief provides a detailed description of these arrangements and will be updated as new information becomes available.

Slipping Through the Cracks

Education Policy — Wed, 22 Oct 2008 08:52:00 -0400

When Congress resumes consideration of the reauthorization of the No Child Left Behind Act, strengthening the federal role in supporting high school reform will be a key issue on the agenda, and with good reason. While elementary school students, on whom most of NCLB’s funding and accountability requirements focus, have made significant achievement gains in recent years, high school achievement has stagnated. Only 70 percent of high school freshmen graduate within four years. Among those who do make it to graduation, only a third have the skills they need to succeed in college.

Cost Estimates for Federal Student Loans

Education Policy — Wed, 01 Oct 2008 04:36:00 -0400

In an ongoing debate about the relative costs of the federal government’s direct and guaranteed student loan programs, some budget experts and private lenders have argued for the use of “market cost” estimates. They assert that official government cost estimates for federal student loans differ from what private entities would likely charge taxpayers to deliver the benefits and services the program provides. A market cost estimate would take such information into account.

A Primer on the Budget Resolution’s Impact on Education Funding

Education Policy — Tue, 11 Mar 2008 03:31:00 -0400

The budget resolution put forward by Congress each year -- which sets out the congressional budget plan for the next five years -- and the ensuing budget process itself are enormously significant for education funding. However, the arcane procedures under which Congress produces and acts upon the budget resolution are often confusing to the media and education advocates alike. This confusion is made worse by political rhetoric and partisan spin. This brief by the New America Foundation’s Federal Education Budget Project is meant to shed light on how the budget resolution affects education funding.

This primer clarifies certain aspects of the budget resolution and the budget process. They include:

Budget Functions and Committee Allocations;
How the Appropriations Committee Allocation Affects Education Funding;
Why the Appropriations Process Matters More than the Budget Resolution;
Mandatory Funding Allocation Matters for Education;
Reserve Funds and Discretionary Cap Adjustments;
Points of Order and Budget Enforcement;
Advance Appropriations for Education; and,
Budget Reconciliation.

For the full text of the FEBP's primer, please see the PDF attached below.

Analysis of Bush’s Education Budget Request

Education Policy — Thu, 07 Feb 2008 14:34:00 -0500

President George W. Bush submitted his eighth and final budget request to the Congress on Monday. Under the proposal, fiscal year 2009 discretionary spending—spending subject to annual appropriations—would be at the same level as in the prior year for domestic programs and agencies not involved in homeland security efforts. The budget request for the Department of Education fits this general theme. Fiscal year 2009 discretionary spending at the Department of Education would total $59.2 billion, the same level of funding provided in 2008. Despite requesting level funding for the agency as a whole, the administration proposes increases for a number of its existing priority programs, as well as significant funding reductions or eliminations for others. In general, there are few new initiatives or programs proposed—most of the "new" education proposals have been included in previous budget requests.

Ten Questions on the Bush Education Budget Request

Education Policy — Mon, 04 Feb 2008 17:12:00 -0500

K-12 EDUCATION

1) The administration proposes increasing No Child Left Behind (NCLB) Title I grants to school districts by 2.9 percent, essentially an increase matching inflation. It also proposes redirecting a greater proportion of Title I funds to high schools. Does this mean that school districts will have to cut Title I funding for K-8 schools, since districts will effectively receive the same level of funding as in the previous year? How will this affect the student achievement in grades 3 through 8?

2) The administration’s budget proposes shifting $100 million from the NCLB’s Title II "Improving Teacher Quality State Grants" program to a "Teacher Incentive Fund" program that supports state and local performance-based compensation initiatives and incentives for teachers to serve in challenging schools. These activities already are allowed under the large and flexible Improving Teacher Quality State Grants program. Why, when the administration is generally trying to consolidate programs and get rid of duplicative ones, does the budget slice off funding for this smaller duplicative program?

3) The newly proposed "Pell Grant for Kids" program includes a provision that scholarship recipients would be required to take an assessment in each grade and subject as required under NCLB’s Title I program. Would there be any accountability for the private schools if the test results show that students are not achieving? What would the consequences be for failure to make adequate yearly progress? If there are only a few students taking the test at a given private school, how would schools provide the public with the information required under NCLB accountability standards?

4) The budget request proposes replacing the 21st Century Learning Community Learning Centers with a new 21st Century Learning Opportunities program, transferring funding to voucher-like scholarships for extended learning activities. The administration argues that the Learning Centers were not improving academic outcomes, and that a scholarship system would be more effective, because states can identify high-quality programs for parents. But states are currently required to ensure the quality of the after-school centers they choose to fund; why would they be any better at identifying high quality choices for parents? How would the new program differ from the Title I Supplemental Educational Services provision, under which states are struggling to evaluate the quality and academic outcomes of extended learning activities?

HIGHER EDUCATION: STUDENT LOANS

5) The Federal Family Education Loan (FFEL) program and the Direct Loan program show similar per loan costs for 2008 and 2009, with the FFEL program showing a slight cost advantage for the first time. However, page 364 of the Budget Appendix notes that costs are higher for the Direct Loan program, because it holds nearly 100 percent of student loans that have defaulted (under FFEL and Direct Loans) and have been rehabilitated through consolidation.

Can per loan program costs be accurately compared when high-default risk FFEL loans are dumped into the Direct Loan program? If OMB and the Department of Education corrected cost estimates for this bias, how would the costs change? Which program would be cheaper for taxpayers if costs were controlled for borrower differences?

6) Federal funds held by state guaranty agencies used to pay loan default claims under the Federal Family Education Loan (FFEL) program nearly doubled to $1.1 billion in 2007 from $579 million in 2006. Are the federal funds held by guarantee agencies in excess of what is needed to pay default claims, and if so, would the administration recommend recalling those funds?

7) The budget proposes a change in the eligibility rules for the new Loan Forgiveness for Public Service Employees program created under the College Cost Reduction and Access Act last year. Borrowers who pursue public service careers and begin loan repayment after October 1, 2007 are eligible to have the remaining balance of their loans forgiven after 10 years. The benefit is available to Direct Loan borrowers and Federal Family Education Loan (FFEL) borrowers who refinance into direct lending.

The budget request would limit eligibility to new borrowers who take out loans after October 1, 2009. If the proposal is enacted, how many borrowers now eligible for public service loan forgiveness will lose eligibility? And what types of shifts in the loan volume does the administration foresee between direct lending and the program that the administration cites as the need for the change in eligibility rules?

8) The loans for short-term training proposal would create a new and relatively small loan program, subsidizing $362 million in loans in 2009 to help dislocated and unemployed workers obtain training. Given the administration’s overarching goal of reducing smaller and duplicative education programs, why not use existing student loan programs for this goal instead of establishing a new program administered by two agencies (the Departments of Labor and Education)?

HIGHER EDUCATION: GRANTS

9) The budget includes a $652 million cancellation of the $960 million Congress has made available for the Academic Competitiveness and SMART Grant programs, citing insufficient program participation rates. Why are participation rates not high enough to use all available funding, and does the administration recommend any action to increase participation? Also, the programs expire after the 2010-11 academic year. Does the administration have a position on whether they should be extended?

HIGHER EDUCATION: TAX BENEFITS

10) The administration is proposing a new higher education tax credit worth up to $1,000 annually on contributions to 529 college savings plans, while maintaining other overlapping higher education tax benefits. Four years ago the administration wanted to "revise and simplify" rules regarding the three largest existing higher education tax credits. Why has the administration abandoned the goal of simplification, and what steps will be taken to ensure the 529 credit does not make the interaction between the higher education tax credits more confusing?

Bonus Question: Did Senator Pell's family consent to use of his name in attachment to a private school voucher proposal? Were they even asked?

The Bush Education Budget Legacy

Education Policy — Thu, 31 Jan 2008 12:20:00 -0500

Next week, President George W. Bush will submit his eighth and final budget request to the Congress. How has he fared with respect to education budget proposals thus far? Answer: although President Bush made the No Child Left Behind Act, which deals with elementary and secondary education, the hallmark of his education policy, from a federal education budget standpoint, the Bush administration’s most lasting legacy thus far is in higher education. The New America Foundation’s Federal Education Budget Project evaluated all the Bush administration's past budget requests and finds that the Bush administration has had relatively little success in enacting its elementary and secondary education budget proposals, but has seen enacted nearly all of its higher education budget proposals, including a major increase in Pell Grant program funding.

Key Findings:

For higher education policy, President Bush successfully used the budget and appropriations process to advance significant reforms. Congress enacted virtually all of the President’s higher education budget proposals, including recently shifting more than $20 billion in taxpayer subsidies from federal student loan providers to increased student financial aid, particularly in the form of larger Pell Grants.
Funding for key federal elementary and secondary education programs increased significantly during President Bush’s tenure in office. In nominal terms, No Child Left Behind Act Title I grant funding is $5.1 billion higher (59 percent) in 2008 than in 2001. Funding for state special education grants under the Individuals with Disabilities Education Act is $4.6 billion (73 percent) higher than in 2001.
However, with the exception of budget proposals directly linked to the No Child Left Behind Act, President Bush’s efforts to drive elementary and secondary education policy changes, such as his school voucher and high school reform proposals, through the budget and appropriations process have been largely unsuccessful. Further, Congress has ignored nearly all of the President’s proposals to eliminate funding for many small, categorical elementary and secondary education programs.

Education Advance Appropriations

Education Policy — Thu, 29 Nov 2007 15:57:00 -0500

The Congressional Democratic majority has made increasing education funding a priority in its fiscal year 2008 spending plan. Their Labor, Health and Human Services, Education and Related Agencies (Labor-H) appropriations conference agreement proposes increases in education for fiscal year 2008 that, if enacted, would result in one of the largest year-over-year increases (in nominal terms) in Department of Education funding since the No Child Left Behind Act was passed in 2002.

Budget Showdown 2007: The Facts Behind Education Funding

Education Policy — Thu, 04 Oct 2007 02:12:00 -0400

The White House and Congress are approaching a major budget debate that could markedly influence federal education funding. This is the first budget cycle since 2000 during which different political parties control the Executive Branch and both chambers of Congress. The federal budget and appropriations process is rarely without acrimony, but this year’s battle may be especially rancorous.

The Federal Education Budget Project finds that although Congress plans a significant increase in federal spending on schools, teachers, and students -- the most significant this decade when considering discretionary and mandatory sources -- education funding has not been a driver of recent increases in federal spending and the contemplated increase is relatively minor with respect to the overall budget. Opponents of proposed increases in education spending argue that the overall federal budget is growing faster than is prudent, and this argument is likely to be a key component of this year’s budget debate. One could argue against proposed increased spending on education because of concerns about program effectiveness, efficiency, or value, but any attempt to single out education spending as the main driver of a federal budget that some believe has become too large would be misguided.

Summary

If a Presidential veto threat does not derail proposed education appropriations legislation, Congress will increase spending on students, teachers, and schools cumulatively this fall by between $7 billion and $8 billion for the following school year. It represents the most significant change to federal education funding in the last decade. Most of the proposed increase is on the discretionary side of the budget and without offset. But $3 billion worth of the total increase is on the mandatory side of the budget and offset by cuts in federal subsidies to student loan providers.
From fiscal year 2001 to fiscal year 2006, discretionary spending grew at a faster rate than mandatory spending. The increase has been driven primarily by defense and other “war on terror” spending. Between fiscal years 2001 and 2006, spending on defense, international affairs, and the Iraq and Afghanistan wars was responsible for 69 percent ($231.3 billion) of the total increase in discretionary spending. In contrast, domestic discretionary spending on matters such as health, transportation, and education was responsible for only 31 percent ($101.6 billion) of the increase. Spending on Department of Education programs was responsible for only 5.5 percent of the increase in overall federal discretionary spending between fiscal years 2001 and 2006.
The budget battle between Congress and the White House could end in a number of ways that will affect education funding. Three possible scenarios for how the budget showdown might play out are presented—one that could result in a government shutdown, one that shifts funding to supplemental appropriations bills, and a third that considers a deal involving federal education funding and the No Child Left Behind Act reauthorization.

A College Access Contract

adminn — Thu, 01 Feb 2007 09:47:00 -0500

Click here for a brief video discussion of this idea.

America's financial aid system imposes too much debt on college graduates, provides too much taxpayer support to banks making college loans, and demands too little of students assuming them. A new "College Access Contract" would allow low-income students to graduate with zero federal student loan debt -- and middle-class students to graduate with interest-free federal student loan debt -- if they:

Work hard in high school to prepare for college -- as evidenced by completing a college prep track or scoring college-ready on a placement exam;
Work or engage in community service while in college an average ten hours a week; and
Evidence a minimum level of competency in an academic area upon completing college.

The program's cost can be paid for by reducing excess lender subsidies and embracing market mechanisms in the delivery of federal student loans.

The full text of this essay is available below in PDF format. To learn more about our other Big Ideas for a New America, please click here.