Education Secretary Duncan Highlights Budget Proposals to Increase College Access and Affordability

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Education Secretary Duncan Highlights Budget Proposals to Increase College Access and Affordability

February 26, 2009

U.S. Secretary of Education Arne Duncan today highlighted provisions of the Department of Education's proposed FY 2010 budget overview that would dramatically expand student financial aid while making it simpler, more reliable and more efficient. "We need to invest in our economic future and enable our kids to compete in today's global environment. America's students and workers need a higher level of education and training," Duncan said.

"President Obama's proposed budget calls for a historic investment to make college more affordable and accessible and to help more students succeed once they get there."

"The new funding announced today represents a significant expansion of our federal student aid programs, providing more dollars to allow more students to attend more schools," he said.

The secretary noted that the proposed budget for the U.S. Department of Education builds on the historic increases in the recently enacted American Recovery and Reinvestment Act (ARRA) by taking additional steps to advance education reform and restore the nation's economy. The ARRA would provide an additional $17 billion for Pell Grants in Fiscal Years 2009 and 2010; the current year funding is $16.2 billion, with 6.1 million students participating.

The stimulus package is also providing nearly $14 billion in tuition tax credits for middle class families, raising the credit to $2,500 from $1,800.

Details of the FY 2010 budget proposal will be released in late April. The budget overview issued today contains provisions that would:

  • Guarantee funding for the Federal Pell Grant program and ensure that grant amounts would keep pace with inflation. By making funding mandatory, the Pell Grant program would no longer be subject to the discretionary budget process, would eliminate uncertainty in funding from year to year, and would ensure that the grants reflect cost of living increases. Beginning with academic year 2010-2011, the Pell grant maximum would be indexed to the consumer price index plus one percent, thus ensuring that Pell grant awards would meet their original objective to cover a substantial percentage of college costs. The maximum for the 2010-11 academic year would be $5,550.

  • Make college loans reliable, stable and efficient, thus eliminating uncertainty families have experienced due to the turmoil of the financial markets. All new student and parent loans would be provided directly from the federal government through the same electronic system that colleges use for Pell Grants. Taxpayers would save more than $4 billion a year in reduced entitlement subsidies, and those funds could be reinvested in more aid to students seeking a higher education. Private sector companies would continue to perform loan collection and related services through performance-based contracts with the Department of Education.

  • Restructure and expand the Federal Perkins Loan Program to ensure that all colleges and universities can take part in the program. The revamped Perkins program would provide $6 billion in loans every year, a significant increase from the current $1 billion in funding. Funds would be distributed to reward schools that provide more need-based aid to students and that maintain reasonable student costs relative to other schools in their sector. As now structured, the formula for distributing Perkins loans is weighted by a decades-old formula that favors particular schools, as well as schools that increase college tuition, rather than to those that keep costs down. Colleges and universities participating would increase from 1,800 to 4,400.

Secretary Duncan also noted that the budget overview includes a $500 million grant program for a new federal-state-local partnership to improve retention and graduation rates, particularly for low-income college students. Funds would support research into what works to help increase college completion.

"Currently, our young people face too many financial and other hurdles to obtaining a college education," Duncan said. "With the American Recovery and Reinvestment Act and the proposals announced today, we are taking several major steps to clear those hurdles."

"By ensuring that higher education is affordable and accessible for all our young people, we will make certain that our nation is prepared to compete in an information-age economy," he said.

Information on the U.S. Department of Education budget overview is available at: