Boost From a Budget Deal

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

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