Senate Republican leaders have unveiled a new fiscal year 2025 budget resolution that they will soon consider on the floor.
The resolution will only garner Republican support, and if it is passed, the House must then approve the same resolution in order for congressional committees to begin drafting budget reconciliation legislation, which is likely to substantially impact higher education, particularly in areas such as student loans, “risk-sharing,” and tax policy.
The budget resolution is the first step in the reconciliation process. It contains instructions to various committees to approve legislation that either adds to or reduces the deficit by a certain amount over the next 10 years. Earlier this year, the House and Senate each passed budget resolutions with substantially different reconciliation instructions, and the Senate has gone back to the drawing board. Committees must forward their bills to the House and Senate budget committees, respectively,
by May 9.
Murky waters ahead
Most importantly for community colleges, the initial House resolution instructed the Education and Workforce (EDW) Committee to reduce programs under its jurisdiction by $330 billion over 10 years, a staggering sum. In contrast, the Senate resolution simply called on the Health, Education, Labor and Pensions (HELP) Committee to approve legislation that reduces the deficit by $1 billion over that period. In reality, the HELP Committee would pass legislation that saved substantially more than $1 billion, but a more realistic target number was not baked into the resolution.
Rather than resolve the differences between the House and Senate’s approaches at this stage, the new budget resolution kicks the can down the road by including separate instructions for the House EDW and Senate HELP committees. Those instructions remain as they were in the previous resolutions – savings of $330 billion for EDW and $1 billion for HELP. So, assuming the resolution passes both chambers (which is not guaranteed), the stage is now set for the Senate and House to produce markedly different education provisions in their reconciliation bills. Eventually, the differences between those bills must be reconciled into legislation that can pass both chambers. This is certain to be a highly contentious process.
Under budget reconciliation rules, deficit reductions (or increases) must be achieved by changing mandatory spending or changes to the tax code. Thus, programs funded by discretionary appropriations, such as the Higher Education Act and Department of Labor workforce training programs, are generally not affected by reconciliation. The education committees will achieve their savings largely by changes to the student loan programs.
‘Current policy’ vs. ‘current baseline’
Outside of reconciliation instructions, one of the most notable features of the new budget resolution is that it would allow Senate Republicans to use a “current policy” baseline to measure deficit impacts rather than a “current law” baseline. This is important because under current law, many of the tax cuts in the 2017 Tax Cuts and Jobs Act expire at the end of the year, so under a “current law” baseline, extending those cuts adds to the deficit.
Under a “current baseline” approach, these extensions would not (technically speaking) add to the deficit, so they could be made permanent under budget reconciliation rules. Senate Democrats vehemently object to this approach, and it remains to be seen whether Republican budget hawks in the House will support it as well.
AACC reconciliation priorities
The imposition of “risk-sharing,” which would require institutions to make payments to the federal government based on their former students’ performance in repaying loans, will likely be considered by the House EDW Committee in reconciliation. The American Association of Community Colleges (AACC) strongly opposes risk-sharing and has advocated on Capitol Hill to keep it out of the bill.
Senate HELP Committee Chair Bill Cassidy (R-Louisiana) and his fellow committee Republicans do not share their House counterparts’ enthusiasm for risk-sharing. Instead, they may consider the accountability measures contained in last year’s SAVE Act, which are often dubbed “gainful employment (GE) for all” because they reflect some of the metrics used in gainful employment regulations put into place by the Biden administration (and which technically remain in effect). However, GE only applies to all programs at for-profit institutions and certificate programs at community colleges and other non-profit institutions.
A chance for workforce Pell
Budget reconciliation legislation also presents an opportunity to enact workforce Pell Grant legislation and shore up the finances of the Pell Grant program, which is currently in a shortfall mode that Congress is obligated to address. It could also serve as the vehicle for enacting the Tax-Free Pell Grant Act. Learn more about these priorities.
Continued community college advocacy on these priorities is crucial. AACC members are strongly encouraged to contact their members of Congress and urge their support for these positions.
