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Obama’s Education Budget Seeks To Restructure Pell Grant

With a goal to expand financial aid and college access, the Obama administration unveiled a 2010 education budget plan Thursday that virtually guarantees future Pell Grant increases while creating a major new initiative on college completion.

To support the president’s goal to significantly increase college completion by 2020, the budget includes a new $2.5-billion Access and Completion Incentive Fund for states with innovative strategies to improve the college graduation rates for low-income students. In his address to Congress this week, Obama pledged that the United States would “again have the highest proportion of college graduates in the world.”

In presenting the new budget on Thursday, Secretary of Education Arne Duncan said aid and access are among the administration’s key domestic policy themes. “There are too many students who are unprepared for college and too many who cannot afford it,” he said.

Also included in the budget is a restructuring of the Pell Grant program to provide guaranteed increases each year. Within the federal budget, the program would move from a discretionary program — subject to annual appropriations from Congress — to a mandatory program similar to Social Security or Medicare.

“This means [the funding] is guaranteed for everyone who qualifies,” Duncan said in outlining the initiative to reporters.

If Congress approves the change, the Pell Grant also would receive annual increases geared to the Consumer Price Index, plus an additional 1 percent. Duncan said the department envisions a top grant of $5,550 in 2010.

With mandatory funding, the program would no longer face shortfalls that occur when more students than expected seek grants. These shortfalls traditionally increase during tough economic times, when more students attend or return to college.

The program “has been plagued by funding shortfalls that complicate the federal appropriations process and threaten the funding of other federal education programs,” the department’s budget plan states.

Elsewhere, officials said they plan a substantial funding increase for Perkins Loans, another campus-based student aid program. As a result, the number of colleges and universities participating in the program would increase from 1,800 to 4,400.

Outside higher education, the plan includes a new early childhood initiative for children up to 5 years old and new efforts to strengthen the teacher work force. However, many details are still not available. While presidents traditionally present their budgets in February for the next fiscal year, this blueprint provides specific information for only a few programs.

Duncan said more details will come in April, when the Department of Education will provide a line-by-line budget for hundreds of federal initiatives.

To pay for new initiatives, the department also plans to find savings in several areas, including student loans. Duncan said the new budget would largely end the bank-led student loan program, the Federal Family Educational Loan (FFEL) program, and replace it with more direct lending from the federal government.

FFEL already “is on life support,” Duncan said. Moving to federal Direct Loans would save about $4 billion in federal subsidies while providing a more stable funding source, the department said.

The April budget also may propose termination of some programs deemed ineffective, department leaders said.

While federal officials prepared a fiscal 2010 education blueprint, the Obama administration and Congress are still working on a final bill for 2009 education funding. The House of Representatives this week approved $410 billion in continued appropriations through Sept. 30. That bill includes a small Pell Grant increase plus $238 million for historically Black institutions and $94 million for Hispanic-serving institutions.

These programs have operated with only short-term funds since the 2009 fiscal year began last October. This temporary spending is set to end in early March.

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