The Biden administration recently released their budget proposal for FY 2025. Even though the president has a limited role in setting the Department of Education’s (ED) budget, the budget proposal is one of the most powerful tools the president has in the budget process, as it sets an early agenda for negotiation and subsequent congressional debates.
This year, President Biden released his budget proposal prior to the current fiscal year being fully funded. The final FY 2024 Department of Education budget—signed into on March 9, 2024 after over five months of continuing resolutions—totaled about $79.1 billion, slightly less than its FY 2023 budget. The FY 2025 Department of Education discretionary budget requested is $82.4 billion. As illustrated in Figure 1, this is lower than the requested FY 2024, 2023, and 2022 budgets, though higher than the enacted FY 2024, 2023, and 2022 budgets. Of note, the FY 2024 and FY 2025 budgets are restricted by funding caps set for nondefense discretionary programs in the Fiscal Responsibility Act of 2023 (FRA) that raised the debt ceiling.
The FY 2025 budget also comes during an election year. President Biden’s proposal serves not only as a roadmap for budget negotiations but a chance to outline his priorities for a second term, showing how he would advance many of the initiatives outlined in his 2024 State of the Union.
President Biden often invokes his father’s aphorism “show me your budget, and I’ll tell you what you value” when discussing federal fiscal policy. Below, Brookings scholars reflect on the Department of Education’s FY 2025 budget proposal to see what we can learn about what the administration values. Scholars also share insights about the underlying policy problems that the funding proposal attempts to address and what research shows about how effective these proposals might be at advancing students’ well-being.
The President has previously proposed to “double Pell,” increasing the annual maximum Pell grant award to $13,000 a year by 2029. The Pell Grant (developed by late Brookings scholar Lois Rice in collaboration with Senator Claiborne Pell) is a need-based, undergraduate financial aid program. About 40% of undergraduates receive a Pell Grant—6.1 million students in 2021-22. Almost half of Pell recipients have a family income less than $20,000. The revised Free Application for Federal Student Aid (FAFSA) formula launched this year should increase both the number of students eligible to receive any Pell and the share of students eligible for the maximum award.
The maximum student award was $7,395 for the 2023-24 school year and was held flat in the FY 2024 budget. The president proposed increasing maximum Pell to $8,145 for the 2025-26 school year (a $750 or 10% increase). This FY 2025 proposal is actually lower than what the administration requested in FY 2024 when they proposed an $8,215 maximum award for the 2024-25 school year. This smaller increase may reflect growing concerns about the fiscal sustainability of the Pell program and would require even larger increases in subsequent years for “double Pell” to become a reality by 2029.
Notably, the FY 2025 proposal differentiates the maximum award based on the institution a student attends, setting a lower maximum award ($7,495) for students enrolled in proprietary (for-profit) institutions. For-profit colleges leave students, on average, worse off than public or private nonprofit institutions, with lower earnings and higher student loan debt. Amid concerns of a rise in for-profit enrollment post-pandemic, it seems the goal of differentiating Pell amounts would be to sway prospective students toward enrolling in nonprofit institutions where their award would have more “purchasing power.” ED often applies different federal financial aid eligibility rules for for-profit and nonprofit institutions. For…
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