Budget Battle in the Offing

March 26, 2009

Democratic leaders in the U.S. Senate and House of Representatives took starkly different approaches Wednesday to the budget resolutions they are required to draft to lay out their chambers' plans to craft federal budgets for the 2010 fiscal year. But the plans shared one common element that could bode well for college students. The House Budget Committee, at the urging of the Obama administration, included in its budget resolution language that opens the door to the legislative process known as "budget reconciliation" and to the administration's plan to eliminate the lender-based guaranteed loan program and to use the savings to lock in automatic, inflation-adjusted increases in the maximum Pell Grant. The House language, which the Senate very consciously omitted, would give the House Education and Labor Committee until September 30 to come up with a plan to shave $1 billion in federal mandatory spending -- a goal the committee would be likely to accomplish only through radical changes in the student loan programs, which the Congressional Budget Office estimates would save $94 billion over 10 years. The Senate Budget Committee opted not to head down the controversial path of budget reconciliation -- controversial because it enables the Senate to approve major changes in federal policy (for instance, on health care) with a vote of a simple majority of its members. But the Senate and House panels both included provisions that would create reserve funds designed to pay for the changes in the Pell Grant Program that college leaders and student advocates aggressively favor.

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