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Slashing the Budget on the Backs of Low-Income Students and Workers

May 24, 2017

President Trump’s proposed budget for Fiscal Year 2018 (FY18) proposes drastic and harmful cuts to vital employment, education, and training services that enable low-income youth and adults to improve their skills and succeed in the workforce. The budget would make extreme cuts to critical student aid programs, workforce training programs for low-income students, and other key federal supports for people pursuing the postsecondary education and credentials that provide an important pathway out of poverty.

Decimates Key Financial Supports for Low-Income Students

  • The budget removes $3.9 billion from the Pell Grant program, which already covers less than 30 percent of the average cost of college attendance. More than 7.7 million low-income students depend on Pell Grants to help cover tuition. Among them, 55 percent have family incomes of $20,000 or less (the poverty threshold for a family of three). Cancelling such a large part of Pell’s funding threatens legal commitments to provide Pell Grants to every eligible student who applies. Because Congress has unique accounting rules for Pell’s need-based guarantee, reductions in the total Pell budget would require future cuts in either grant amounts or student eligibility policies. Such restrictions would further harm low-income students, compounding the damage done to the Pell Grant program in 2011, the last time there was a shortfall. Notably, the president’s budget expresses support for year-round Pell Grants, which allow low-income students to receive one-and-a-half Pell Grants over a school year to help pay for attendance in three semesters, or year-round. However, this provision in the budget is unnecessary because year-round Pell Grants were restored beginning July 1, 2017, by the final FY17 Appropriations Act that passed earlier this month.
  • The president’s budget cuts student aid by $5.2 billion. Student aid programs are already insufficient to meet the financial need of today’s students. Low-income students attending postsecondary education face greater challenges than ever. Because more and more employers are demanding education and training beyond high school, students find themselves in the difficult position of needing postsecondary training that is increasingly unaffordable. Even without these cuts, students have significant unmet need, with students of color particularly affected. In 2011-12, 57 percent of Black students in community colleges received Pell grants; however, 82 percent still had a remaining unmet financial need averaging $5,000. Three-quarters of students from Asian, Hispanic, and Native backgrounds also have remaining unmet need. 
  • The proposal also seeks to eliminate Supplemental Educational Opportunity Grants (SEOG), which help cover college costs each year for more than 1.6 million students with the greatest need, nearly all of whom also receive a Pell Grant [click here for a table showing how many students in your state would lose SEOG grants under the president’s proposal].
  • The budget would slash $488 million from the Work-Study program, eliminating employment opportunities for more than 300,000 low-income students working their way through college, about 25 percent of whom have an income below $12,000 annually [click here for a table showing how many students in your state would lose Work-Study jobs slots under the president’s proposal].  
  • The budget also harms students with dependent children by eliminating the Child Care Access Means Parents in School (CCAMPIS) program, which provides $15 million in federal funds to offer child care services so students can attend class and stay on track in their postsecondary educations.

Adds Even More Stress for Borrowers Already Struggling with Repayment

  • The budget would end subsidized student loans, which benefit low- and moderate-income borrowers by stopping the accrual of interest while students are in school. This leads to a lower overall loan burden once the borrower begins repayment. Because 6 in 10 independent students who obtain these loans have incomes of $20,000 or less, subsidized loans are a particularly important resource.
  • The budget would end debt forgiveness for students who go into public service careers. Under this program, individuals who choose to take lower-paying jobs in the public or non-profit sector can have their federal student loans forgiven after 10 years. This program offers students with low or modest incomes the opportunity to pursue their career passion without drowning in student debt by opting to pursue jobs that provide vital direct services to low-income communities as teachers, librarians, public defenders, public safety officers, emergency medical technicians, and other crucial service providers. More than 550,000 student loan borrowers are currently enrolled in this program and many more could be eligible because they have chosen careers that could qualify for debt forgiveness.
  • One positive proposal in the budget would consolidate the current student loan repayment options to two, replacing the five existing income-driven repayment plans with a single plan and maintaining the existing standard repayment plan. The new income-driven plan would allow federal student loan borrowers to repay their loans at a rate of up to 12.5 percent of their discretionary income for 15 years, after which their loan(s) would be forgiven. If this were enacted, low-income borrowers could receive forgiveness from student-loan debt 5 or 10 years sooner than under existing income-driven repayment plans.

Impedes Economic Mobility for Youth and Adults with the Greatest Barriers to Employment

CLASP urges the House and Senate to reject Trump’s budget. Instead, Congress should continue strong federal investments to help low-income Americans succeed in today’s—and tomorrow’s—economy by supporting adequate FY18 appropriations for our nation’s fundamental education and workforce programs.

View estimated proposed cuts by state for:

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