The President's budget proposal expands opportunities for students to go to college and graduate by expanding student aid, shifting resources from banks and middlemen toward students, creating new incentives for colleges to focus on student completion, and expanding access to low-cost Federal student loans.

Restoring American Leadership in Higher Education

Expands Pell Grants and Puts the Program on Sure Footing.
Because the Administration is committed to making college affordable for all Americans, the 2010 Budget builds on the recovery Act by supporting a $5,550 Pell Grant maximum award in the 2010-2011 school year. But it is not enough just to make Pell Grants more generous and to put on a short-term patch. Fourteen times since 1973, the maximum Pell Grant has failed to increase even in nominal dollars. To make sure that we have a highly-educated workforce and that the opportunity to go to college is not determined by how much money you have, we need to put the Pell Grant program on sure footing. The Administration will index Pell grants to the Consumer Price Index plus 1 percent in order to address inflation. In addition, the Administration proposes to make the Pell Grant program mandatory to ensure a regular stream of funding and eliminate the practice of “backfilling” billions of dollars in Pell shortfalls each year. Finally, while expanding student aid, the Administration will also simplify the student aid application process.

Stabilizes the Student Loan Program for Students and Saves Billions of dollars for Taxpayers. Right now, the subsidies in the Government-guaranteed student loan program are set by the Congress through the political process. That program has not only needlessly cost taxpayers billions of dollars, but has also subjected students to uncertainty because of turmoil in the financial markets. The President’s Budget asks the Congress to end the entitlements for financial institutions that lend to students. The Administration will instead take advantage of low-cost and stable sources of capital so students are ensured access to loans, while providing high-quality services for students by using competitive, private providers to service loans. The approach in the Budget, originating all new loans in the direct lending program, saves more than $4 billion a year that is reinvested in aid to students. The Budget also makes campus-based, low-interest loans more widely available through a new modernized Perkins Loan program, overhauling the inefficient and inequitable current Perkins program.

Focuses on College Completion. It is not enough for the Nation to enroll more students in college; we also need to graduate more students from college. A few States and institutions have begun to experiment with these approaches, but there is much more they can do. The Budget includes a new five-year, $2.5 billion Access and Completion Incentive Fund to support innovative State efforts to help low-income students succeed and complete their college education. The program will include a rigorous evaluation component to ensure that we learn from what works.

Questions & Answers

• Questions & Answers on the Future of the FFEL and Direct Loan Programs
• Questions & Answers on Updates to the Perkins Loan Program
• Questions & Answers on the Pell Grant Program

Related Links

• Department of Education Funding Highlights (pdf)
• U.S. Department of Education Press Release - Education Secretary Duncan Highlights Budget Proposals to Increase College Access and Affordability
• A New Era of Responsibility: Renewing America's Promise (pdf)
• President's FY 2010 Budget Request for the U.S. Department of Education
• Department of Education Fiscal Year 2010 Budget Request: Fact Sheet