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President’s FY 2014 Budget Proposes Legislative Education Reforms

April 12, 2013—President Obama April 10 released his FY 2014 budget request (see related stories), including a number of legislative proposals for education reform that will require congressional action, such as making permanent the American Opportunity Tax Credit.

The most prominent legislative proposal in the education budget request would make federal student loan interest rates more “market-based.”  New interest rates would be equal to the 10-year Treasury bill plus 293 basis points (2.93 percentage points) for unsubsidized Stafford loans for graduate and professional student and plus 393 basis points (3.93 percentage points) for GradPLUS loans. The budget estimates that for the 2013-2014 academic year, this would result in interest rates of 4.9 percent and 5.9 percent, respectively. Unlike the variable structure that existed prior to 2006, rates would be determined annually and fixed for the life of the loan.

Similar to the administration’s proposal in past fiscal years, the president would 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. The president also proposes redirecting campus-based aid, including Perkins, to institutions that “demonstrate success in serving low-income students, restrain growth in tuition, and provide good value.”

The proposed Race to the Top: College Affordability and Completion initiative would provide $1 billion for grants to “drive comprehensive change in State higher education policies and practices in order to improve college affordability, access, and quality.” The grants are tied in part to maintaining state education funding levels.

The budget also provides $30.9 million for merit- and need-based scholarships and fellowships to postsecondary students under Graduate Assistance in Areas of National Need (GAANN) programs.


Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-862-6116


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806