President Trump has released the 2018 budget proposal this week and based on the initial review it appears that higher education will face significant reductions, specifically to student aid programs. These projected budget changes total over $143 billion in savings over the next 10 years. For the Department of Education, it would represent a 13.5% reduction for just next year by cutting current funding levels.
It is too early to determine the outcome of this budget proposal but for many, the cost of attaining a college education will be getting more expensive. We have created a summary below of the proposed changes so that you can compare current rules and the proposed changes.
Financial Aid Reductions Chart Based on 2018 Proposed Federal Budget
Budget Open Issues with Trump’s 2018 Budget Proposal
The information above is still only a proposal and the president’s budget is never accepted in total. We will have to wait and see what happens with Congress. Until the budget is approved, many of the details will not been disclosed or made available.
After reading the proposed budget, I have some concerns. If these are not addressed some loopholes will still exist, allowing education cost and student debt to continue to rise. Listed below are items that were not fully explained in the proposed budget. For proper implementation, here are some additional items that need to be addressed, so that we can begin to fix the problem.
- Dollar limits on loan forgiveness amounts.
- If a single IDR method is approved … will filing taxes married and joint versus married and separate still have advantageous?
- Grandfathering or transition periods to the various changes were not identified.
- Is the loan forgiveness going to be taxable?
- Will the government establish loan limits on Parent Plus and Grad Plus loans?
We do not know the outcome of this budget proposal but we can expect that funding will be reduced. As a result, higher education and the public will need to make adjustments to their future expectations. We often get upset when things are taken away from us, but to put this into prospective the Trump Department of Education proposal is 10% higher than the 2015 presidential budget submitted. While I do not agree with all of the proposed financial aid changes, simplifying the income driven repayment methods could help borrowers better understand their repayment options.
Members of the higher education community are also concerned that these funding reductions will affect accessibility. I would agree this is going to make college more expensive for most families. College affordability and student debt are now the biggest worry for both students and parents according a recent Princeton Review study. Prior decisions of adding funding has not helped slow down cost increases or the debt issue. Maybe a different approach will change consumer behavior and put more emphasis on outcomes and value. Only time will tell.