THE BLOG

4 Ways the House Republican Budget Hurts Students

04/16/2015 11:50 am ET | Updated Oct 04, 2015

House Republicans recently released their proposed 2016 budget, and it is cause for concern. As emphasized in recent questioning by Rep. Mark Pocan (D-WI) -- available to watch on C-SPAN -- there are four terrible budget proposals that will negatively impact students: Freezing Pell Grants for 10 years, eliminating subsidized loans for undergraduates, repealing improvements to income-driven repayment plans and getting rid of Public Service Loan Forgiveness. Let's look at how these proposals will hurt millions of student loan borrowers.

  1. Freezing the maximum Pell Grant award at 5,775 per school year for 10 years. Federal Pell Grants -- need-based grants provided to low-income students -- are a lifeline when it comes to affording a college education. Every year millions of Americans, especially African-American and Hispanic undergraduates, rely on Pell Grants to make college affordable and to reduce the amount they have to borrow. Unfortunately, Pell Grants have not kept up with the rising cost of college. According to the Education Trust, a maximum Pell award covered more than half the cost of attending a four-year public college in the 1980s; a maximum 2014-15 award will cover less than one third. Freezing the maximum Pell award will increase the rate of this downward trend due to the rate of inflation. Making the funding fully discretionary, as the House budget proposes, will also increase the possibility of further cuts down the road.

  • Repealing improvements to income-driven repayment plans: One of the biggest protections borrowers have against delinquency and default is enrolling in an income-driven repayment plan. The most protective of these plans are Pay As You Earn and Income-Based Repayment (IBR) that reduce what borrowers pay to 10 percent of their discretionary income and discharge their debt after 20 years. The House budget contemplates eliminating both of these -- leaving the older version of IBR in which borrowers have to pay a less affordable 15 percent of their income and wait 25 years for discharge. This will significantly increase monthly payments for the borrowers who can least afford it.
  • Eliminating subsidized loans for undergraduates. Subsidized Stafford loans, which are available for undergraduates from low- and moderate-income families, do not accrue interest while a borrower is in college or during their six-month grace period. According to the Institute on College Access and Success, eliminating subsidized loans will burden needy students with thousands of dollars of additional debt. And, of course, the costs to students will rise over time as interest rates rise from their current historically low rates.
  • Getting rid of Public Service Loan Forgiveness (PSLF). The purpose of PSLF is to help make long-term public service careers financially viable. It does so by allowing borrowers to earn forgiveness on their student loans after they have repaid them on time for 10 years while working at a wide range of government or nonprofit careers. It has become an important tool for attracting and retaining employees in critical jobs that support society's well-being, including police, firefighters, social workers, teachers, public defenders, legal aid attorneys, local government workers and the military. Eliminating Public Service Loan Forgiveness will make it harder to attract indebted graduates to long-term public interest careers. At Equal Justice Works, we are collecting data on the positive impact PSLF makes on society and public interest careers. You can help by filling out this survey on our website.
  • These changes are projected to save the government $60 billion over 10 years. While this may sound like a lot, it is a mere two percent of the $3.02 trillion in tax revenue the federal government collected in fiscal year 2014 alone. Additionally, it would severely hurt millions of Americans by increasing their student debt burdens, giving them less financial flexibility and putting them in greater financial peril. These are bad ideas for past, present, and current students. Call or write your Representative and say you oppose these changes to the 2016 budget!

    Isaac Bowers is Associate Director for Law School Engagement & Advocacy, overseeing the Student Debt, Student Engagement, and Law School Relations programs. He was previously responsible for the organization's educational debt relief initiatives. In that capacity, he wrote a weekly blog for U.S. News; conducted monthly webinars for a wide range of audiences; advised employers, law schools and professional organizations; and worked with Congress and the Department of Education on Federal legislation and regulations. Prior to joining Equal Justice Works, he was a Fellow at Shute, Mihaly & Weinberger LLP in San Francisco, where he represented citizen groups and local agencies in environmental litigation and land use and planning issues. Isaac received his J.D. from New York University School of Law.