What Obama's 2017 Budget Means for Higher Ed

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President Obama's 2017 budget reiterates his plans to make community college free and to expand and remake the Perkins loan program. It's unlikely, though, that Congress will be receptive to the proposals.
February 10, 2016

In his final budget proposal, issued on Tuesday, President Obama hit familiar notes, calling for an expansion of the Pell Grant program and a shot in the arm for community colleges.

The budget — for the 2017 fiscal year, which begins on October 1 — reiterates the president’s plan to make community college free while adding a new wrinkle: tax credits for companies that invest in community colleges and hire their graduates. It repeats his request for Pell Grant bonuses for colleges that graduate large numbers of low- and moderate-income students, and for stricter limits on the amount of revenue that for-profit colleges can draw from student aid. It also includes a proposal to expand and remake the Federal Perkins Loan Program, which expired in October but received a short-term reprieve in December.

Congressional Republicans have rejected most of those ideas in the past, and they are likely to do so again this year. But two perennial proposals might get some traction in the coming reauthorization of the Higher Education Act: streamlining the Free Application for Federal Student Aid, which has been widely criticized as overly complicated, and shrinking the number of loan-repayment plans available to borrowers. Both ideas are popular among lawmakers in both parties.

The president’s plan now heads to Congress, where election-year politics and budget constraints make it unlikely that many of his proposals will pass. Congress didn’t finalize the current year’s spending bill until December, and it’s not likely to do much better this year. Here's a look at how the budget would affect academe:

A tune-up for Pell Grants.

President Obama's proposals include a plan, first announced in January, to make Pell Grants available year-round to students taking a full course load, and to provide a $300 "on-track Pell bonus" to students who take at least 15 credit hours in a semester. (That's the number of hours typically required to graduate on time.)

Reinstating year-round Pell Grants — which fell victim to budget cuts in 2011 — would help students finish degrees faster by letting them take more courses during an academic year. Many students now exhaust their annual Pell eligibility after just two semesters and are unable to pay for summer courses. The new proposal would provide nearly 700,000 students with an additional $1,915, on average, next year, the department has said.

The president’s budget would also make Pell Grants available to some adult prisoners for the first time in 20 years. A pilot program, which the Obama administration announced last summer, wouldn’t change the law that prohibits prisoners from receiving the grants, but it would allow some aid to flow to inmates through "experimental sites." —K.F.

A boost for community colleges.

Like the current year’s budget, the plan seeks billions of dollars to make two years of community college free to millions of students. Unlike that budget, it would also provide grants to make two years of college free — or significantly cheaper — to low-income students attending minority-serving institutions. That expansion of the plan was borrowed from congressional Democrats.

The president’s budget would also create a new $2.5-billion tax credit for employers that team up with community colleges to design curricula, provide instruction and equipment, and offer job-based learning. Under that plan, which the administration announced on Friday, employers deemed eligible by their states would get a $5,000 credit for every community-college graduate that they hire into a full-time job. —K.F.

Two enforcement goals for the Education Department.

A couple of lines in the budget's appendix confirm the administration's plans for the Education Department to hold colleges accountable. Here's the first:

Last year, you might recall, President Obama asked for a $31-million increase in funding for the department's Office for Civil Rights, which enforces the Title IX rules that require colleges to investigate and resolve complaints of sexual misconduct. He ended up getting a boost of $7 million instead.

This year he is again seeking $31 million more — enough to create more than 150 new, full-time positions in the office.

Here's the second key line:

This is a request for more than 80 new positions in the Office of Federal Student Aid. Education Department officials announced on Monday their intent to create a new "Student Aid Enforcement Unit" to root out abuses in student lending and related areas. The department plans to move some existing employees into that unit, but it's also looking to staff up. —B.R.

Deep concerns over science spending.

As for federal spending on science, the administration appears to have taken a gamble by backing a few large projects — in areas that include cancer, brain science, and personalized medicine — and suggesting that much of the resulting increase in spending come from the mandatory side of the budget.

So far that idea appears to have backfired. Many of the administration’s key allies in the scientific community have criticized it as a risky maneuver that may end up costing them in the long run.

“This budget does not live up to the president’s longtime commitment to funding research,” the Association of American Universities said in a statement. Groups representing medical researchers were especially caustic, both because of the potential harm to the budget of the National Institutes of Health, the largest single provider of academic research money, and because of other proposed changes that would affect academic medical centers and their students.

Over all the president proposed spending $152 billion on research and development in the 2017 fiscal year, an increase of about $6 billion, or 4 percent, over the current year.

That includes budgets of $33.1 billion for the NIH, an increase of about $1 billion; nearly $8 billion for the National Science Foundation, an increase of about $500 million; and nearly $5.7 billion for the Department of Energy’s Office of Science, an increase of about $325 million.

But the bulk of those increases would come from the creation of new mandatory spending allocations. It appears doubtful that Congress will approve those changes.

Mandatory spending refers to spending on programs — entitlements such as Medicare and Social Security — in which the amounts are set by existing law and typically continue indefinitely. The rest of the budget is considered discretionary, and the Republican-led Congress has imposed sharp limits on discretionary spending in recent years to drive down the size of government.

Just counting the discretionary portion of the budget, according to an analysis by the American Association for the Advancement of Science, the NIH would face a cut of $1 billion under Mr. Obama’s plan, and the NSF would see an increase of only $100 million.

Obama-administration officials said on Tuesday that restrictions in the discretionary budget had pushed them to seek large amounts of science spending through mandatory categories. The choice of programs to be financed through mandatory spending did not indicate any judgment about their relative value, said Kei Koizumi, assistant director for federal research and development at the White House Office of Science and Technology Policy.

“These investments are all important,” Mr. Koizumi said at a briefing.

But advocates for research spending warned that the administration’s failure to find more room for science in the discretionary portion of its budget proposal could be an invitation for Congress to de-emphasize such spending, only a year after it approved increases.

Outside of spending on energy research, “the proposed investments rely on mandatory funding streams that Congress will not seriously consider,” said the AAU, which represents 60 leading American research universities.

Some advocates for research spending were even sharper, arguing that the mandatory-spending plan might serve only to antagonize Congress.

The response from the Republican chairman of the Senate Appropriations Committee, Sen. Thad Cochran of Mississippi, appeared to reflect that fear. “There will be little appetite in Congress for mandatory spending that diminishes fiscal discipline and congressional oversight,” Senator Cochran said in a written statement.

The plan represents a real risk for science spending, said one budget analyst, Stan Collender, executive vice president at Qorvis/MSLGroup, in Washington. “The science and research communities have to be worried about the possibility that Congress will go with the president’s number on the discretionary side, ignore the mandatory request, and then claim it is fully funding the White House’s request,” Mr. Collender said. —P.B.

Elsewhere in grants ...

The budget seeks flat funding for the Federal Work-Study Program, Supplemental Educational Opportunity Grants, and the TRIO and Gear Up college-preparatory programs. It requests modest spending increases for most minority-serving institutions, along with $30 million for grants aimed at improving completion rates at such colleges. It would revive the First in the World innovation-grant competition for colleges, which Congress killed last year. —K.F.

Kelly Field is a senior reporter covering federal higher-education policy. Contact her at Or follow her on Twitter @kfieldCHE.

Paul Basken covers university research and its intersection with government policy. He can be found on Twitter @pbasken, or reached by email at

Brock Read is assistant managing editor for daily news at The Chronicle. He directs a team of editors and reporters who cover policy, research, labor, and academic finance, among other things. Follow him on Twitter @bhread, or drop him a line at