Department of Education FY13 Budget Summary

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1 Department of Education FY13 Budget Summary **Subject to changes based on the Department of Education s budget briefing on 2/14.** The FY13 budget would provide $69.8 billion in discretionary appropriations for the Department of Education, an increase of $1.7 billion (2.5 percent), above FY12. This would represent the largest increase for any domestic agency. The Department of Education is focused on three new priorities: (1) improving affordability and quality in postsecondary education, (2) elevating the teaching profession to the same high status it enjoys in nations with the highest-performing education systems, and (3) strengthening the connections between school and work and better aligning job training programs with workforce demands. Student Financial Aid Overview The Department of Education estimates that the combination of postsecondary student aid (discretionary and mandatory) and selected tax benefits will increase to $165 billion in FY13 to help more than 15.2 million students and their families. Pell Grants: The FY13 budget would provide $36.1 billion for the Pell Grant program ($22.8 billion in discretionary funding and $13.3 billion in mandatory funding) to provide a maximum Pell award of $5,635 to almost 10 million students in the award year. This scheduled increase of $85 is the result of the Student Aid and Fiscal Responsibility Act of 2010 (SAFRA). The budget estimates a 10-year funding shortfall for the Pell Grant program. It would make a down payment towards the long-term funding gap by including measures to promote borrowers timely completion of their education programs and reduce costs associated with providing defaulted loan borrowers opportunities to repay their credit. Specifically, the reforms would include eliminating the in-school subsidy on subsidized Stafford loans to 150 percent of normal program length, reducing payments to guarantee agencies in the Federal Family Education Loan (FFEL) program, and making changes to the Perkins Loan program. TRIO Programs: $840 million in discretionary funding for federal TRIO programs, the same level as FY12. GEAR UP: $302 million for GEAR UP, the same level as FY12. Student Aid Administration: $1.129 billion to administer student aid programs, $86 million above FY12 levels. 1

2 Campus-Based Aid As part of the President s affordability and quality priority, the FY13 budget would propose an increase for most of the campus-based student aid programs based on a new allocation formula. The new formula would reward institutions that keep their tuition and tuition increases low, enroll and graduate relatively high numbers of Pell-eligible students, offer work study experiences relevant to students studies, and provide good value. The proposed changes to campus-based programs would require a Congressional authorization. Federal Work-Study: $1.127 billion, an increase of $150 million above FY12 levels. The budget proposes to double the number of work-study jobs over five years. The allocation for work-study would change to benefit institutions that provide good value to students, in part by offering them more meaningful work-study opportunities. Perkins Student Loan Program: The budget would re-structure the Perkins Loan program to allow for significantly increased lending authority. The new program would provide $8.5 billion in loan volume annually to support up to 2,700 additional postsecondary institutions. The new loans would have the same interest rate and loan amounts as unsubsidized Stafford Loans and would accrue interest while students are in school. The Department of Education, rather than institutions, would operate the new loan program, as with the Direct Loan program. Lending authority would be allocated among institutions based on the same revised criteria as other campus-based programs. Supplemental Educational Opportunity Grants (SEOG): $735 million for SEOG, the same level as FY12. Higher Education Programs As part of the President s affordability and quality priority, the budget would call for two new efforts: Race to the Top for College Affordability and Completion: $1 billion program to provide incentives for systematic state reforms that lead to increased affordability, quality, and productivity. While specific details are not yet available, states would be rewarded for maintaining a consistent financial commitment to their public higher education institutions; having public colleges and universities that contain the growth in what students pay for college and measure the value in terms of financial returns and other outcomes; and using data to drive policy and better align K-12 to college, as well as across colleges. First in the World Competition: $55 million to enable colleges and nonprofit organizations to develop, validate, or scale up innovative and effective strategies for increasing college access and completion, particularly for minority and low-income students, through an evidence-based competition. The plan includes a $20 million set-aside for minority-serving institutions. The competition would be administered through the Fund for Improvement of 2

3 Postsecondary Education (FIPSE). The Department of Education does not need Congressional authorization to move forward on this initiative. Graduate Education Graduate Assistance in Areas of National Need (GAANN): $30.9 million for grants to postsecondary institutions to support graduate students of superior ability and high financial need studying in areas of national need. The Javits Fellowship program was consolidated into the GAANN program in FY12. The proposed FY13 budget would support approximately 687 fellowships, including noncompeting continuation awards for Javits recipients. The Office of Postsecondary Education is still developing additional details on the consolidation plan. International Education International Education and Foreign Languages Studies (IEFLS): $75.7 million, a $1.7 million increase above FY12. This would include $68.3 million for domestic programs; an increase of $1.7 million to support the Administration s goal of increasing global competency, particularly those from traditionally disadvantaged groups; and $7.5 million for overseas programs, the same as FY12. The Institute for International Public Policy was eliminated in FY12. Research and Data Collection Institute for Education Sciences: $621 million for the Institute, a $27.5 million increase above FY12 levels. Education research would receive $202.3 million, an increase of $12.5 million; the regional labs would be flat-funded at $57.4 million; and statewide data systems would receive $53.1 million, an increase of $15 million. Advanced Research Projects Agency-Education (ARPA-ED): Similar to the FY12 budget, the FY13 budget would provide funding through the Investing in Innovation (i3) program for new evidence-based approaches to closing the achievement gap in K-12. The new initiative is modeled after similar research programs at the Department of Defense and the Department of Energy. The focus would be on developing breakthrough educational technology solutions in high-need areas, such as STEM. While not mentioned in the budget, the Administration has proposed, as part of its affordability and quality initiative, a new College Scorecard for all degree-granting institutions. This scorecard would be in addition to the existing College Navigator consumer information guide already in place through the Department s National Center for Education Statistics. (The Department of Education does not need new Congressional authority to move forward on the scorecard initiative, so it is already soliciting feedback from the community on the current draft 3

4 template.) The Department would also provide an updated financial aid shopping sheet which it announced in October that would serve as a required template for all colleges to provide information on college financial aid packages to students and their families. STEM Education The budget recognizes the need improve STEM education and outlines three overarching priorities to ensure more students get the skills needed to succeed in the STEM fields: increasing STEM literacy so that more students are motivated to pursue STEM subjects; improving the quality of math and science teaching; and expanding STEM education and career opportunities for underrepresented groups, including women and minorities. Specific initiatives in the budget include: Effective Teachers and Learning in STEM: $149.7 million to replace the current Mathematics and Science Partnerships program (would be eliminated in the budget). Funds would support high-quality STEM instruction, particularly in high-need LEAS. Scale Up of Proven Practices in K-12 STEM: $60 million for a jointly funded evidencebased math education initiative with the National Science Foundation ($30 million from the Department of Education s Fund for the Improvement of Education and $30 million from NSF). STEM Teacher and Leader Training and Professional Development: $80 million to expand promising and effective models of teaching preparation in STEM. This program would support the President s goal of preparing 100,000 new teachers in science, technology, engineering, and mathematics (STEM) fields over the next decade and recruiting 10,000 STEM teachers over the next two years. Teacher Preparation The budget proposes several approaches to attract, train, support, and reward talented individuals in the teaching profession while empowering them to work together in new ways to dramatically improve the achievement of all students. Presidential Teaching Fellows: Similar to the FY12 budget, the FY13 budget would replace the TEACH grants with a new $190 million in mandatory funding state grant program. The new program would make formula grants to states that measure the effectiveness of their teacher preparation programs based on student achievement data of their graduates, among other measures. The fellowships would be available for up to 10,000 individuals trained in a high-need subject who commit to teach for at least three years in a high-need school. The budget proposes elimination of the TEACH grant at the end of the academic year. Hawkins Centers of Excellence: Similar to the FY12 budget, the FY13 budget would provide $30 million for new centers to improve and expand teacher education programs at minority-serving institutions. 4

5 Effective Teaching and Learning: $186.9 million for a new competitive grant to help states strengthen their literacy programs. Effective Teaching and Learning for a Well-Rounded Education: $90 million to provide competitive grants to states and high-need LEAs and non-profit partners. One-Time Funds for the Education Profession: $5 million to create incentives for states to work with teachers and unions on teacher reforms, including reforms at colleges of education. Excellent Instructional Teams: $2.9 billion to consolidate five teacher and school leader programs to help states and LEAs. Teacher Quality Partnership: The budget would eliminate the TQP, funded at $42.8 million in FY12. Student Loans Perkins Student Loans: See above. Student Loan Interest Rate: The budget would suspend the scheduled increase in the interest rate for subsidized Stafford loans from 3.4 percent to 6.8 percent on July 1, That would mean that all new loans issued through June 30, 2013 would keep the 3.4 percent rate. The budget tables estimate a cost of $1.8 billion in 2012 and $2 billion in In-School Interest Subsidy for Undergraduate Students: The budget would eliminate the subsidy for undergraduates after 150 percent of program length, at an estimated $1.8 billion over 10 years. Students who do not complete their programs within 150 percent of their program length would begin accruing interest at that point in time. The budget also proposes technical changes to guaranty agencies compensation for rehabilitating defaulted loans. Job Training Community College to Career Fund: $8 billion for a job training program at community colleges and states, over the next three years, to train an estimated two million workers in highgrowth and high-demand areas. If approved, the program would be a joint effort of the Departments of Education and Labor, each of which would spend $1.3 billion a year on the effort.. For-profit institutions would not be eligible. The budget would also provide $1 billion over three years to expand career academies and $1.1 billion to support the reauthorization and reform of the Career and Technical Education program. Tax Credits 5

6 American Opportunity Tax Credit (AOTC): The budget would make permanent the AOTC, a partially refundable tax credit worth up to $10,000 per student over four years of college. 6