Boost From a Budget Deal

Congress passes a 2016 spending and tax bill that blows away caps on discretionary spending to fund more student aid and health research.

December 21, 2015

WASHINGTON -- Congress did more on Friday than just avoid a government shutdown -- the omnibus spending and tax bills it passed ignored the mandatory cuts in discretionary spending that were due to take effect, resulting in significant increases for many programs important to colleges and students.

Under the agreement, the maximum Pell Grant will rise to $5,915 in 2016 and the National Institutes of Health will receive its biggest increase in more than a decade, $2 billion, to $32.084 billion.

The tax bill approved as part of the package will also make permanent the American Opportunity Tax Credit, which reimburses middle-class families for some of their college spending, as well as tax breaks that encourage donations to colleges and other nonprofit groups and corporate investments in research and development.

Many college leaders had been bracing for the next stage in mandatory budget cuts known as sequestration, which began in 2013 and are due to continue through the decade. Bills passed last summer by both chambers in the Republican-controlled Congress would have constrained if not cut spending on most higher education-related programs, and redirected a nine-figure surplus in the Pell Grant Program for other purposes.

The compromise budget, which many observers viewed as an early sign of leadership by Representative Paul Ryan, the new Republican Speaker of the House, abandoned sequestration, to the displeasure of many conservatives.

The legislation, which President Obama signed, covers spending in the 2016 fiscal year, which began in October. It addresses numerous policy issues, as well, such as once again allowing Pell Grants for qualified students without a high school diploma who show the "ability to benefit" from a higher education, with an emphasis on those enrolled in "career pathways" programs.

The measure does not block the Obama administration from implementing its new regulations requiring vocational programs at for-profit and other colleges to prove that they provide "gainful employment" to their graduates, as the original House- and Senate-passed versions would have.

Student Aid Gains

The portion of the legislation dealing with the Education Department will raise the maximum Pell Grant to $5,915, up from $5,775. This increase means that the Pell Grant will have risen by 25 percent, from $4,731, during President Obama's time in office.

The budget package also includes sizable gains for college access programs, with the TRIO and GEAR UP programs for needy students both experiencing roughly 7 percent increases, as seen in the table at bottom. Programs that help institutions that serve large numbers of students from underrepresented groups also benefit from the bill.

Other key financial aid programs, such as the Supplemental Education Opportunity Grant and work-study programs, stay flat under the spending measure.

One victim of the compromise legislation is the Fund for the Improvement of Postsecondary Education, which receives no funds in the measure. FIPSE has a long history as a stimulant for innovation in higher education, but it has been steadily eroded in recent years amid organizational changes and as lawmakers have dictated that it fund pet priorities.

The Education Department's vocational programs remain largely flat under the bill, but job training funding through the Labor Department's Workforce Investment Opportunity Act will increase by about 5 percent. The measure also provides $90 million for a new Apprenticeship Grant program, which will provide competitive grants to states and community-based organizations to launch and expand apprenticeship programs.

Research Funds Rebound

The spending measure is a boon to several federal research programs important to universities, pleasing academic groups.

"The bill includes significant investments in scientific research at all the major research agencies, with the highlight being a $2 billion increase for the National Institutes of Health that helps make up for years of neglect," said Hunter Rawlings, president of the Association of American Universities.

In addition to the NIH increase for biomedical research, the legislation provides significant boosts for energy and agricultural research, and a lesser increase, proportionally, for the National Science Foundation.

Key Tax Provisions Made Permanent

A companion measure approved alongside the omnibus spending bill permanently extends several important tax provisions that were at risk of expiring.

The American Opportunity Tax Credit, which was created as part of the federal stimulus package several years ago by consolidating and expanding several existing tax breaks, reimburses taxpayers up to $2,500 for a range of college-related expenses (tuition, fees, books and other educational materials). While the tax credit is often criticized for doing little to help low-income Americans, it provides significant benefits for middle- and upper-middle-class students and families.

The year-end measure also permanently extends tax breaks that allow individuals to make tax-free distributions from individual retirement accounts for charitable purposes, and that give companies business tax credit for research and development activities conducted at universities.

The legislation also delays for two years the implementation of the so-called Cadillac tax on high-cost, employer-sponsored health plans, about which many college and university leaders are concerned.

Highlights of the 2016 Omnibus Spending Measure

  2015 Appropriation (millions) 2016 Appropriation (millions)

% Change, 2015 to 2016

Financial Aid Programs      
Maximum Pell Grant (not in millions) $5,775 $5,915 2.4%
Supplemental Educational Opportunity Grants 733.1 733.1 0.0%
Federal Work-Study 989.7 989.7 0.0%
Iraq and Afghanistan Service Grants 340.0 0.0 -100.0%
Institutional Aid      
Strengthening Institutions 80.4 86.5 7.6%
Strengthening Tribal Colleges 25.7 27.6 7.4%
Strengthening Alaska Native and Native Hawaiian-serving Institutions 12.8 13.8 7.8%
Strengthening Historically Black Colleges and Universities (HBCUs) 227.5 244.7 7.6%
Strengthening Historically Black Graduate Institutions 58.8 63.3 7.7%
Strengthening Predominantly Black Institutions 9.2 9.9 7.6%
Strengthening Asian-American and Native American Pacific Islander-serving Institutions 3.1 3.5 12.9%
Strengthening Native American-serving nontribal institutions 3.1 3.3 6.5%
Minority Science and Engineering Improvement 9.0 9.6 6.7%
Aid for Hispanic-serving Institutions 100.2 107.8 7.6%
Promoting Postbaccalaureate Opportunities for Hispanic Americans 9.0 9.7 7.8%
Tribally Controlled Postsecondary Career and Technical Institutions 7.7 8.3 7.8%
National Technical Institute for the Deaf 67.0 70.0 4.5%
Gallaudet University 120.3 121.3 0.8%
Howard U 221.8 221.8 0.0%
Student Assistance      
TRIO Programs 839.8 900.0 7.2%
GEAR UP 301.6 322.8 7.0%
Special Programs for Migrant Students 37.4 0.0 -100.0%
Child Care Access 15.1 15.1 0.0%
Program for Students with Intellectual Disabilities 11.8 11.8 0.0%
Career-Technical/Adult Education      
Perkins State Grants 1,117.6 1,117.6 0.0%
Adult education 569.0 582.0 2.3%
Graduate Education      
Graduate Assistance in Areas of National Need 29.3 29.3 0.0%
Other Areas      
International Education and Foreign Language Studies 72.1 72.1 0.0%
Fund for the Improvement of Postsecondary Education 67.8 0.0 -100.0%
Teacher Quality Partnerships 40.6 43.1 6.2%
First in the World 60.0 200.0 233.3%
Office for Civil Rights 100.0 107.0 7.0%
Inspector General 57.8 59.3 2.6%
Institute of Education Sciences      
Research, Development and Dissemination 179.8 195.0 8.5%
Statistics 103.0 112.0 8.7%
Regional Educational Laboratories 54.4 54.4 0.0%
Statewide Data Systems 34.5 34.5 0.0%
Adult Employment and Training 776.7 815.5 5.0%
Dislocated Workers Training 1236.3 1241.7 0.4%
Educational and Cultural Exchanges 589.9 590.9 0.2%
National Endowment for the Humanities 146.0 147.9 1.3%
AmeriCorps 335.4 386.0 15.1%
Department of Defense Basic Research  2,166.0 2,077.0 -4.1%
National Institutes of Health 30,084 32,084 6.6%
Health Professions Training 751,600 786,895 4.7
National Aeronautics and Space Administration Science  6,351.0 5,475.0 -13.8%
Department of Energy Science 5,071.0 5,350.2 5.5%
National Science Foundation 7,334.2 7,463.5 1.8%
--Research 5,933.6 6,033.6 1.7%
Education 866.0 880.0 1.6%
Commerce Department National Institute of Standards and Technology 675.5 690.0 2.1%
Agriculture Department Research 786.9 819.7 4.2%

Follow me on Twitter @dougledihe. 


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