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Omnibus Bill Offers Financial Boosts, Compromises

Sprinkled throughout the last-minute 4,155-page, $1.7 trillion omnibus federal spending bill that was signed right before Christmas by President Joe Biden, are funding provisions and policy changes that impact the world of higher education. The new legislation was welcomed by policy experts, although it did not contain everything that they had hoped for.

Dr. Dominique Baker, associate professor of education policy in the Annette Caldwell Simmons School of Education and Human Development at Southern Methodist UniversityDr. Dominique Baker, associate professor of education policy in the Annette Caldwell Simmons School of Education and Human Development at Southern Methodist University“There are wins for students in this bill,” said Dr. Dominique Baker, an associate professor of education policy in the Annette Caldwell Simmons School of Education and Human Development at Southern Methodist University, “and there are compromises.”

One such compromise involved the Pell Grant, which President Biden had proposed increasing by over $2,000, part of a plan to double the maximum award by 2029. The omnibus bill raised it by $500—far from what Biden had asked for, but still the largest increase in over a decade.

“People should feel good that the Pell Grant is increasing as much as it is,” said Dr. Sandy Baum, a nonresident senior fellow in the Center on Education Data and Policy at the Urban Institute, a left-leaning think tank. “You always have to ask for more than you think you’re going to get.”

The bill includes a bounty for historically under-resourced institutions, including HBCUs and other minority serving institutions (MSIs): a $137 million funding increase. There’s also $50 million for infrastructure improvements at MSIs. According to Dr. Marybeth Gasman, associate dean for research in the Graduate School of Education at Rutgers University and executive director of the Rutgers Center for Minority Serving Institutions, these funds are critical.

“MSIs have been starved of resources for far too long,” she wrote in an email to Diverse. “MSIs need infrastructure support and have been lacking it for decades.”

According to Gasman, the emphasis on MSIs is a relatively recent development.

“Under the Biden-Harris Administration there is considerable focus on MSIs—happening in conjunction with increased emphasis from media, funders, and corporations,” she wrote. “It’s very exciting to see MSIs get the attention they deserve given the role they play in educating low-income, first generation, and students of color—as well as the contributions they make to society at large.”

The omnibus offers additional funding for a variety of programs that help students who have the toughest roads to completion. The bill includes $45 million—a 700% increase—for the Postsecondary Student Success Program, which offers grants, tutoring, and other wraparound services for students who have started, but not finished, a credential. TRIO programs, which include Upward Bound, Talent Search, and Student Support Service, got a $54 million increase to $1.2 billion, and Child Care Access Means Parents in School, which subsidizes childcare for low-income students, got $10 million more, up to $75 million.

“There’s a growing acknowledgement in Congress [and] the executive branch of the totality of people’s lives. They don’t stop when they go to college,” said Baker. “Things like childcare [and] wraparound services for transportation needs are a good thing.”

A change in retirement law will also have higher ed impacts. Workers will now be able to count student loan payments as contributions to retirement plans, making them eligible for matching funds from their employers.

Dr. Sandy Baum, nonresident senior fellow in the Center on Education Data and Policy at the Urban InstituteDr. Sandy Baum, nonresident senior fellow in the Center on Education Data and Policy at the Urban Institute“If you’re putting a dollar into your student loans, that’s a dollar that you might not have available to put into your retirement and that you would lose access to employer subsidies as a result of that is problematic,” said Baum. “This way, you don’t lose out on the employer subsidies. It makes that conflict much less severe.”

However, not all the news from the omnibus was positive.

Funding for student aid administration will remain flat at just over $2 billion. The Biden administration had requested an increase of over $620 million to cover the Office of Federal Student Aid’s (FSA) growing responsibilities, which in the coming year will include transitioning to new student loan servicers, re-starting the collection of paused student loans, and administering any debt cancellation program that survives February’s Supreme Court cases.

Baker compared the situation to that of the IRS, which, after years of budget cuts, has found itself far less able to fulfill its responsibilities. If there aren’t enough staff to manage the transition between loan servicers, for example, clerical errors could mean that borrowers in the Public Service Loan Forgiveness program might wind up having to make extra payments.

“It’s not an exaggeration to say that that’s the sort of road that we start heading down when we’re not increasing the funding for FSA,” said Baker. “You need an office that is fully staffed to be able to ensure that the contractors are doing what they’re supposed to do, [and] that when we switch contractors, all of the paperwork is flowing correctly.”

Baker said that compromises are to be expected.

“It comes down to the realities of legislating,” she said. “I think there’s always going to be wishes for more funding.”

But she noted that some departments are expected to compromise more than others.

“You know,” said Baker, “Defense gets as much money as it wants.”

Jon Edelman can be reached at [email protected].


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