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  • Washington Highlights

    President’s Budget Proposes Graduate-Professional Student Aid Reforms

    Matthew Shick, Sr. Director, Gov't Relations & Regulatory Affairs

    President Obama Feb. 2 released his fiscal year (FY) 2016 budget request, which proposes significant changes to federal student aid and repayment programs under the Health Resources and Services Administration (HRSA) and the Department of Education.

    The budget proposes to more than double funding for the National Health Service Corps (NHSC) for FY 2016 and includes a new $2.6 billion mandatory fund for the program [see related story]. The NHSC provides scholarship and loan repayment awards to primary care clinicians in exchange for practicing in a federally designated underserved area.

    The president’s budget for the Department of Education calls for “simplification” of the federal student aid system. Among other proposals impacting graduate and professional student aid programs, the president’s budget would:

    • cap Public Service Loan Forgiveness (PSLF) at $57,500 (the aggregate loan limit for undergraduate students);
    • exempt from taxation loan forgiveness provided under the Pay-As-You-Earn (PAYE) program; and
    • eliminate the Lifetime Learning Credit and Student Loan Interest Deduction education tax incentives.

    A comparison of current law to the president’s FY 2016 proposal is available on the AAMC government affairs website.

    AAMC President and CEO Darrell G. Kirch, M.D., released a Feb. 2 statement expressing gratitude for the NHSC investment, but disappointment that “the administration’s proposal to curtail student loan repayment and education tax incentives would disproportionately hurt graduate and professional student borrowers.”

    As in prior years, the president’s budget proposes to reform the Perkins Loan and increase funding to $8.5 billion, a $7.5 billion (750 percent) increase over current levels. Rather than operating through institutional revolving funds, the federal government would originate and service Perkins Loans. Perkins Loans would carry the same interest rate as unsubsidized Stafford Loans.

    Similar in aim―if not in scope―to a proposal by Senate Health Education Labor and Pensions (HELP) Committee [see Washington Highlights, Jan. 9], the president also recommends reducing the length of the Federal Application for Student Financial Assistance (FASFA).

    The president’s legislative proposals are expected to be considered under the upcoming reauthorization of the Higher Education Act (HEA). House Education and the Workforce Education Subcommittee Chair Virginia Foxx (R-N.C.) has said the chamber will likely produce a reauthorization bill the first week in March.