- Trump Administration releases ‘skinny budget’
- Tax-Free Pell bill reintroduced in Senate
- ED asks colleges to help in facilitating repayment
Trump administration releases ‘skinny budget’
The Trump administration last week released its “skinny budget” for fiscal year 2026 (FY 26). Typically, a new administration will release a top-line budget priorities document (the “skinny budget”) ahead of a full funding request that it will send later to Congress.
The budget document is light on details, but it does ask for major funding cuts to discretionary programs. As AACC’s Jim Hermes covered in the Community College Daily, the budget seeks to deliver a 22.6% cut to discretionary, non-defense funding, including a 15% cut to funding for the Education Department (ED). While some of these cuts reflect decreased staffing and administrative costs after the administration’s “reduction in force” actions, the budget proposes full-scale elimination of or significant cuts to key programs, including Federal Work Study, Supplemental Educational Opportunity Grants, Child Care Access Means Parents in School, TRIO, GEAR-UP and the HEA Title III-A Strengthening Institutions Program.
While the budget request signals the administration’s priorities, it is still Congress’ job to appropriate funding for discretionary programs, and appropriations bills will require bipartisan support to pass the Senate.
Tax-Free Pell Grant Act reintroduced in Senate
A bipartisan group of lawmakers this week reintroduced the Tax-Free Pell Grant Act in the Senate.
Led by Senate Finance Committee members Chuck Grassley (R-Iowa), Sheldon Whitehouse (D-Rhode Island), Thom Tillis (R-North Carolina) and the Committee’s ranking member Ron Wyden (D-Oregon), the bill would make Pell Grants fully non-taxable and help more community college students access the American Opportunity Tax Credit (AOTC).
As AACC’s David Baime covers in the Community College Daily, community colleges have long supported this legislation. The change will largely only affect community college students because the tax code is currently biased against low-income students attending low-cost institutions. Many of these students receive a portion of their Pell Grant award as a refund, and this aid is currently subject to taxation. This prevents community college students from using the full value of their Pell Grant award for books, supplies and living expenses. Moreover, this common-sense change will better facilitate community college Pell Grant recipients to receive the $2,500 AOTC.
A companion bill was introduced in the House in April by Reps. Lloyd Doggett (D-Texas), Mike Kelly (R-Pennsylvania), Danny Davis (D-Illinois) and Randy Feenstra (R-Iowa) – all members of the House Ways & Means Committee, which has jurisdiction over tax issues.
AACC thanks member colleges who have assisted in advocacy efforts on this issue and will continue lobbying for the Tax-Free Pell Grant Act’s inclusion in reconciliation legislation.
ED asks colleges to help in facilitating repayment
The Education Department (ED) this week issued a new Electronic Announcement (EA) asking institutions to conduct outreach to borrowers, urging them to ensure that their federal student loans are in good standing. This communication comes a month after the department announced that they would resume the collections and administrative wage garnishment process for borrowers who have defaulted on their student loans.
As reported by AACC’s Matthew Dembicki in Community College Daily, borrowers began receiving communications this week about the potential consequences of remaining in default and urging them to restore the loans to good standing by making a payment, enrolling in an income-driven repayment plan or working with their servicer to rehabilitate the loan. ED is now asking colleges to send similar communications to former students not enrolled as of January 1, 2020, reminding them of their repayment obligations, suggesting that they review repayment options, and urging them to ensure that their loans are in good standing and that their contact information is up to date on StudentAid.gov.
Notably, the EA is not a mandate and these communications to former students are optional for institutions. Institutions that want to send notices are asked to do so by June 30. Institutions will receive more information on how to identify at-risk borrowers, according to the EA.