The budget presented by House Budget Committee chairman Paul Ryan (R–Wis.) provides a topline function 500 (spending on education, training, employment, and social services) budget of nearly $74 billion.
The $73.9 billion budget ($864 billion over 10 years) makes some important reforms to the federal Pell Grant program. It would eliminate eligibility for less-than-half-time students; set the maximum Pell award at $5,730 (funded through discretionary instead of mandatory spending); and return Pell to pre-2007 levels. Congress grew the Pell Grant program in 2007 by expanding eligibility and funding, resulting in Pell spending increasing from $16 billion in 2008 to $27 billion by 2015. As the budget notes, the Pell grant program is currently on an unsustainable path.
The Ryan budget also proposes important higher education reforms such as employing fair-value accounting measures. The federal government’s current accounting practices, by and large, fail to account for market risk, likely understating the cost of student loans to taxpayers. Fair-value accounting better assesses this risk, and as long as the federal government is in the student loan business, fair-value accounting should be employed to ensure loan programs use a non-subsidizing interest rate.
In addition, the proposal would repeal the expansion of income-based repayment—which does nothing to incentivize colleges to keep costs in check—and would eliminate in-school interest subsidies for undergraduate students.
The Ryan budget seeks to “remove regulatory barriers to higher education that act to restrict flexibility and innovative teaching, particularly as it relates to non-traditional models such as online coursework.” In order to achieve this worthwhile goal, policymakers should support proposals to decouple federal financing from accreditation, enabling states to have more control over course credentialing while driving down college costs.
On the K–12 front, the Ryan budget wisely calls for the elimination of ineffective and duplicative programs. As the budget notes, the Government Accountability Office has identified 82 duplicative teacher-quality programs spread across 10 federal agencies. The budget “calls on the committee” to terminate ineffective and wasteful programs.
It should be noted that there are well over 100 federal education programs housed in multiple federal agencies. Federal per-pupil expenditures have nearly tripled in real terms since the 1970s. All of the growth in federal spending and programs has done little if anything to improve academic outcomes and has instead tied the hands of state and local leaders with bureaucratic paperwork.
To truly reduce federal intervention in education, policymakers should work to eliminate all competitive grant programs and streamline major formula grant programs, making them student-centered and portable. The Ryan budget could have been much stronger on K–12 reform by decisively calling for the elimination of the vast majority of federal education programs and restoring control of those that remain to the states.
Finally, the budget wisely proposes eliminating the Social Services Block Grant, which includes $1.7 billion in federal spending on child care services and is one of 45 federal preschool programs.
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