Here’s What Trump’s 2020 Budget Proposal Means for Higher Ed

President Trump’s proposed federal budget for the 2020 fiscal year, unveiled on Monday, includes a $7-billion cut for the Department of Education, a streamlined repayment process for student loans, and the elimination of the Public Service Loan Forgiveness program.

The proposal, for the fiscal year that begins on October 1, is unlikely to be enacted in a divided Congress. But, as is the case every year, the wish list does signal the White House’s priorities, including those for higher education.

This year’s proposal is yet another effort by the administration to streamline the student-loan system, which could bring down costs for taxpayers and students, said Robert Kelchen, an assistant professor of higher education at Seton Hall University. But the department and the president, he said, “have little ability to change the terms of federal student loans,” a process that must involve Congress.

“This is a topic that will dominate the discussions this year about reauthorizing the Higher Education Act,” Kelchen said, referring to the law, last reauthorized in 2008, that governs federal financial aid. (Sen. Lamar Alexander, the Tennessee Republican who leads the education committee, has said that he is optimistic that the act could be reauthorized by the end of 2019.)

The growth of student-loan debt, which has surpassed $1 trillion, could influence Congress to support a simpler, streamlined repayment program that holds all borrowers to the same standards, Kelchen said.

Under the current Public Service Loan Forgiveness program, only federal and nonprofit-group employees qualify for loan forgiveness. The president’s proposal would provide forgiveness to all undergraduate borrowers with remaining balances after 15 years, and to borrowers with graduate-school debt after 30 years.

While the forgiveness program needs reform, its elimination would be a mistake, argued James Kvaal, president of the Institute for College Access and Success. “We know from research,” he said, “that student-loan debt often deters graduates from going into low-paying careers, which include teaching, health care, and the military.”

Trump’s budget outline also suggests a risk-sharing loan system that would require colleges to share some financial responsibility for defaults on student loans. That change, however, is “still under discussion within the administration” and would require approval from Congress, said Jim Blew, the Education Department’s assistant secretary for planning, evaluation, and policy development.

The budget also has a $500-million request from the department for federal work-study programs, which is $630 million less than in the 2019 budget. “We’d like for federal work-study to be a career-building opportunity, rather than how it’s used as a subsidized work force on campuses,” Blew said.

The proposed change would allocate work-study funds to colleges on the basis of the number of Pell Grant recipients they enroll. The federal formula on which the allocation is based now is outdated, some say. Kelchen’s research has found that community colleges and newly established colleges receive less in work-study funds than older, more-expensive private colleges do. Colleges might oppose the funding change, but it is generally supported by higher-education researchers, Kelchen said.

It’s encouraging that the budget considers restructuring federal work-study, Kvaal said, but it costs money to offer a high-quality program. “There’s a disconnect between the rhetoric in connecting work-study to students’ careers to the budget that’s provided,” he said.

Higher-education organizations criticized the budget cuts on Monday. “Wrong-headed,” Kvaal called them. The budget cuts, he said, outweigh the much-needed changes in the federal student-loan system.

The American Council on Education, which represents more than 1,700 college presidents, urged Congress to increase funding for student aid and biomedical research.

Follow Terry Nguyen on Twitter at @terrygtnguyen, or email her at terry.nguyen@chronicle.com.