President Obama released his budget request for FY 2015 yesterday, calling for new money to provide bonuses to colleges that bolster graduation rates for Pell Grant recipients and help support the development of the administration’s proposed college rating system.
The budget also proposes making the American Opportunity Tax Credit permanent and excluding all student loan forgiveness from taxation.
Among the higher education provisions in the budget request:
Funds for existing programs:
- The Pell Grant Program: Level-funded at $22.8 billion, which would allow the maximum award to increase $100 to $5,830 because of an automatic, mandatory increase in funding. That increase would take effect in the 2015-2016 academic year. The plan also calls for strengthening the “academic progress requirements in the Pell Grant program to encourage students to complete their studies on time.”
- TRIO ($838 million), GEAR UP ($302 million), and the Graduate Assistance in Areas of National Need Program ($29 million) would receive level funding.
- Federal Work-Study: Level-funded at $975 million.
- The Supplemental Education Opportunity Grant Program: $733 million, a cut of $1 million from FY 2014.
- National Institutes of Health: $30.2 billion, an increase of roughly $200 million from FY 2014.
- National Science Foundation: $7.255 billion, an increase from $7.180 billion in FY 2014.
- First In The World: $100 million, an increase of $25 million from FY 2014.
- First In The World for Minority-Serving Institutions: $75 million for Title III institutions “to undertake reforms and pursue innovations to improve the performance of those institutions in enrolling and graduating low-income students.”
- The Obama administration’s college ratings plan: $30 million total “for pilot and demonstration programs” with $10 million of that total going to “support for the development and refinement of a new college rating system”
- State higher education performance fund: $4 billon over four years (with $1 billion in FY15) for a new competitive matching grant program for states to support, reform and improve the performance of their public higher education systems (a version of the Race to the Top: College program first proposed in FY 2013).
- College opportunity and graduation bonus: $7 billion over ten years (with $647 million in FY15) to support a program to reward colleges that successfully enroll and graduate a significant number of low- and moderate-income students on time and encourage all institutions to improve their performance.
- Permanently extend the American Opportunity Tax Credit.
- Eliminate taxability of loan amounts forgiven under Income-Based and Income-Contingent repayment programs.
- Make Pell Grants excludable from taxable income, and better coordinate Pell Grant and AOTC.
- Cap the tax value of certain itemized deductions, including the charitable deduction, for upper-income taxpayers.
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