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Before a Joint Session of Congress on September 8, 2011, President Barack Obama unveiled details of this $447 billion American Jobs Act that aims to bolster the slowly recovering economy and put Americans back to work. President Obama indicated that the jobs plan will be fully paid for and will not add to the nation’s deficit.
On September 19, 2011, President Obama unveiled his detailed plan for economic growth and deficit reduction. The plan was sent to the Joint Committee on Deficit Reduction (“Supercommittee) with the hope that it would provide a basis for their deliberations. The Supercommittee is tasked with establishing recommendations to cut the federal deficit by at least $1.2 trillion over the next 10 years. The plan includes the $447 billion from the American Jobs Act, which is designed to stimulate growth.
The deficit reducing blueprint would also cut $4.4 trillion from the federal deficit over the next 10 years, roughly twice the amount that the Supercommittee is charged with reporting by Thanksgiving. The plan contains $1.2 billion in savings already identified in the debt ceiling deal, $580 billion in mandatory savings cuts, $1.1 trillion in savings from troop drawdown in Iraq and Afghanistan and $1.5 trillion in tax reform proposals including the observation of the “Buffett rule.” The “Buffett rule” is that people earning more than $1 million per year should not pay a smaller portion of their income in taxes than middle-class Americans pay. The deficit reduction number also includes $430 billion in interest savings due to reduced debt levels.
Regarding the education component of the President’s proposal, his plan calls for $40 billion in aid to prevent the anticipated layoff of up to 280,000 teachers nationwide due to state budget cuts. The bill also proposed $5 billion in funding to construct and renovate community college and tribal college buildings.
While some of the tax cuts in the package are attractive to Republicans, the size of the package and the focus on stimulus spending are not well received by the Republicans. The Republicans are also against Obama’s plan to seek a greater deficit reduction figure by including tax increases. However, the Republicans have said that they are willing to work on proposals where there is some agreement in both parties.
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On September 30, 2011, FY 2011 will end and House Appropriations Committee Chairman Hal Rogers (R-KY) introduced the FY 2012 Continuing Resolution through November 18, 2011, that includes a 1.409 percent cut to projected FY 2012 spending to meet an overall $1.043 trillion cap. Though it is unclear how the House Continuing Resolution would affect the Department of Education’s budget, the Pell Grant program and other financial aid programs will most likely not be affected by this short-term spending bill.
The Budget Control Act of 2011 requires Congress to maintain the $1.043 trillion spending limit on discretionary spending in FY 2012. Since certain programs, such as the Pell Grant program, will inevitably cost more in FY 2012 than in FY 2011, maintaining FY 2011 spending levels for some programs would require cuts to other programs. Congress is scheduled to adjourn on September 23, 2011 for the remainder of the month so the Continuing Resolution would have to pass both chambers and be sent to President Obama for signature by that date.
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On September 12, 2011, the Department announced that the FY 2009 national default rate increased to 8.8 percent from the FY 2008 of 7 percent. The rate increased for all sectors: from 6 percent to 7.2 percent for public institutions, from 4 percent to 4.6 percent for private institutions, and from 11.6 percent to 15 percent at for-profit institutions. The rate is a snapshot, representing the cohort of borrowers whose loan repayments came due between October 1, 2008 and September 30, 2009 and who defaulted before September 30, 2010. About 3.6 million borrowers entered repayment during this time, and 320,000 borrowers went into default.
Secretary of Education Arne Duncan stated in a press release of September 12, 2011:“These hard economic times have made it even more difficult for student borrowers to repay their loans, and that’s why implementing education reforms and protecting the maximum Pell grant is more important than ever. We need to ensure that all students are able to access and enroll in quality programs that prepare them for well-paying jobs so they can enter the workforce and compete in our global marketplace.”
The Department noted that it had taken several proactive steps to protect students and taxpayers from programs that leave borrowers with large amounts of debt and poor employment prospects, including tightening loopholes to protect students from misleading or overly aggressive recruiting practices and establishing rules that require career college programs to better prepare students for gainful employment or risk losing access to federal student aid. The Department pointed out that in recent months several institutions, particularly for-profit schools, have taken action to ensure that current and future students are well served and that several institutions have ended underperforming programs, upgraded their curriculum, begun offering free trial periods so students can try out a program before enrolling, raised admissions standards, and boosted repayment rates through better loan counseling.
For more information, please visit http://www2.ed.gov/offices/OSFAP/defaultmanagement/cdr.html.
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Every September 17th, every postsecondary education must offer educational programs about the Constitution in order to remain eligible for Title IV funding. The requirement is a result of a provision sponsored by the late Senator Robert Byrd (D-WV) that was included in the FY 2004 appropriations bill. Institutions have the flexibility to implement the law in any way of their choosing.
Constitution Day resources are available on the National Constitution Center website.
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