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Department of Education

STUDENT AID OVERVIEW

Fiscal Year 2015 Budget Request

CONTENTS

Page

FY 2015 Budget Proposal ................................................................................................. P-1

Student Aid Reform Proposals .......................................................................................... P-3

Student Aid Programs Output Measures........................................................................... P-5

Program Performance Information .................................................................................... P-6
STUDENT AID OVERVIEW

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Federal Student Aid Programs

(Higher Education Act of 1965, Title IV)

(dollars in thousands)

FY 2014 Budget Proposal

FY 2015 Authorization: Indefinite

Budget Authority:1

2014 2015 Change

Grants and Work-Study:

Pell Grants

Discretionary funding $22,778,352 $22,778,352 0

Mandatory funding 2 6,167,000 6,397,000 +$230,000

Subtotal, Pell Grants 28,945,352 29,175,352 +230,000

Federal Supplemental Educational

Opportunity Grants 733,130 733,130 0

Federal Work-Study 974,728 974,728 0

Iraq and Afghanistan Service Grants 285 355 +70

TEACH Grants 3 5,045 17,914 +12,869

Total, Grants and Work-Study 1,713,188 1,726,127 +12,939

Net Loan Subsidy, Loans: 4

Federal Family Education Loans (FFEL) 5 -5,676,042 0 +5,676,042

Federal Direct Student Loans 6 -14,791,594 -7,156,331 +7,635,263

Federal Perkins Loan Program 7 0 -827,674 -827,674

1 Table reflects discretionary appropriations and mandatory funding. 2 Amounts appropriated for Pell Grants for 2014 and 2015 include mandatory funding provided by the 

Consolidated Appropriations Act, 2012; and the Budget Control Act of 2011. 3 For budget purposes, TEACH Grants is operated as a credit program. Amounts reflect the new loan subsidy, or 

the net present value of estimated future costs. 4 Total net subsidy in any fiscal year reflects the estimated net cost of the loan program for that fiscal year. It 

includes both positive and negative subsidies and upward and downward impacts of re-estimates and modifications 

of existing loans. A negative subsidy occurs when the present value of cash inflows to the Government is estimated 

to exceed the present value of cash outflows. Normally budget authority is not shown if it is negative. However, for 

informational purposes, the amounts here reflect estimated negative budget authority. Negative subsidy is reported 

(as negative outlays) to a negative subsidy receipt account. 5 Budget authority for FFEL does not include the FFEL Liquidating account. Amount for 2014 reflects a net 

downward re-estimate of $1,655,679 thousand, due primarily to updated interest rate assumptions, and a net 

downward modification of $4,020,363 thousand as a result of changes to guaranty agencies’ retention and collections 

of rehabilitated loans included in the Bipartisan Budget Act of 2013. 6 Amount for 2014 includes a net downward re-estimate of $9,460,485 thousand, primarily due to updated 

interest rate assumptions. Fiscal year 2015 request includes a net upward modification of $7,243,186 thousand as a 

result of the proposed expansion of the Pay As You Earn plan. 7 Amount for 2015 reflects the Budget proposal to reform and modernize Perkins Loans as a mandatory credit 

program; the request shows the net present value of estimated future costs of the estimated 2015 loan cohort.
STUDENT AID OVERVIEW

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FY 2015 Budget Proposal

In fiscal year 2014, the Federal Government will provide a significant investment of 

$161.3 billion in grants, loans, and work-study assistance to help students pay for 

postsecondary education. These funds help millions of Americans obtain the benefits of a 

higher education. The Administration is proud of this commitment to higher education. To help 

prevent students and families from going into far too much debt than they can afford in order to 

finance their education, a strategic approach to student aid is needed to ensure that both 

students and the Nation are prepared for the challenges of the global economy. Accordingly, 

the fiscal year 2015 Budget includes proposals to address the college affordability challenge. 

The request dedicates $169.8 billion to Federal student aid in fiscal year 2015, including 

$29.2 billion in Pell Grants and over $133.7 billion in student loans. More than 12.8 million 

students would be assisted with the cost of their postsecondary education at this aid level.

This overview details the package of reforms proposed by the Administration as part of its 2015

Budget that will increase aid to students while improving the effectiveness of the grant and 

student loan programs. Current student aid programs are described in detail under Student 

Financial Assistance, beginning on page Q-1, TEACH Grants Overview on page R-1, and the 

Student Loans Overview on page S-1. The administrative costs requested in support of these 

student aid programs are presented in the Student Aid Administration section, beginning on 

page AA-1.

The United States has long been a global leader in postsecondary education, but recently this

advantage has slipped. While the U.S. ranks 5th in terms of the proportion of 25-64 year olds 

with a postsecondary education, it ranks 12th in attainment among those aged 25-34. There is 

an opportunity gap as well. Today, high-school graduates from the wealthiest families are 

virtually certain to continue on to higher education, while just over half in the bottom quartile

attend. Even when high-school graduates can afford to begin higher education, they all too

often fail to finish. Only about 6 in 10 4-year college students graduate within 6 years.

With a focus on the issue of college affordability – in accordance with the President’s vision of 

leading the world in college attainment rates by 2020 – the 2015 Budget provides sufficient 

resources to fully fund the $5,830 maximum Pell Grant award in the 2015-2016 award year;

reforms the Pay As You Earn repayment plan and simplifies the selection of income-based

repayment plans; and reforms the campus-based student aid programs to target aid to students 

attending those schools with a dedication to quality education at a reasonable price.

In addition to fully funding the Pell program in fiscal year 2015, this Budget seeks to address the 

long-term Pell funding gap by expanding and modernizing the Perkins Loan program and 

converting it to a mandatory credit program. The savings associated with this proposal would 

offset corresponding increases in mandatory budget authority needed to maintain a fully funded 

Pell Grant program. This important reform to Perkins Loans will ensure the Pell Grant program 

has sufficient resources, while still safeguarding aid available to the neediest college students. 

While this Budget provides for significant contributions toward addressing future Pell funding 

needs, the Administration will work with Congress to ensure the long-term stability of this vital 

program.
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Student Aid Reform Proposals

The 2015 Budget is designed to make needed reforms to modernize and improve the Federal 

student aid programs. The specifics of these reform proposals are discussed below.

Expand the Pay As You Earn Repayment Plan to All Borrowers

In October 2011, the Administration announced the Pay As You Earn (PAYE) initiative to 

accelerate the benefits of the Income-Based Repayment (IBR) plan as modified in the Health 

Care and Education Reconciliation Act. The 2015 Budget proposes to extend PAYE to all 

student borrowers and reform the PAYE terms to ensure that program benefits are targeted to 

the neediest borrowers. The reforms also aim to safeguard the program for the future, including 

by protecting against institutional practices that may further increase student indebtedness. The 

most substantial change will be to expand PAYE to all student borrowers, regardless of when 

they borrowed. In addition, to simplify borrowers’ experience while reducing program 

complexity, PAYE would become the only income-driven repayment plan for borrowers who 

originate their first loan on or after July 1, 2015, which would allow for easier selection of a 

repayment plan. Students who borrowed their first loans prior to July 1, 2015, would continue to 

be able to select among the existing repayment plans (for plans for which they now qualify and 

for loans originated through their current course of study), in addition to the modified PAYE.

The Budget proposes additional changes to PAYE to include:

• Eliminating the standard payment cap under PAYE so that high-income, high-balance 

borrowers pay an equitable share of their earnings as their income rises;

• Calculating payments for married borrowers filing separately on the combined household 

Adjusted Gross Income;

• Capping Public Sector Loan Forgiveness (PSLF) at the aggregate loan limit for 

independent undergraduate students to protect against institutional practices that may 

further increase student indebtedness, while ensuring the program provides sufficient 

relief for students committed to public service;

• Establishing a 25-year forgiveness period for borrowers with balances above the 

aggregate loan limit for independent undergraduate students;

• Preventing payments made under non-income driven repayment plans from being 

applied toward PSLF to ensure that loan forgiveness is targeted to students with the 

greatest need; and,

• Capping the amount of interest that can accrue when a borrower’s monthly payment is 

insufficient to cover the interest to avoid ballooning loan balances.

Reform Campus-Based Aid to Better Serve Low-Income Students 

Some of the roughly 7,000 institutions of higher education that participate in the Federal Pell 

Grant and/or Federal Student Loan programs also participate in one or more of the Federal 
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Campus-based Aid programs: Federal Supplemental Educational Opportunity Grants (SEOG), 

Federal Work-Study and Federal Perkins Loan programs. While all schools are eligible to 

participate in the campus-based aid programs, antiquated formulas with stringent hold-harmless 

provisions have resulted in institutions receiving allocations distorted in ways that reward 

schools for high tuition prices, bear little reflection to the population of Pell-eligible students 

attending the institutions, and fail to consider whether institutions are a good value for students. 

The President’s 2015 Budget proposes to reform Federal allocations in the campus-based 

programs to target those institutions that enroll and graduate higher numbers of Pell-eligible 

students, and offer an affordable and quality education such that graduates can repay their 

educational debt.

Perkins Loan Program Modernization and Expansion

The Budget proposes to expand and improve the Perkins Loan program into a new 

Unsubsidized Perkins Loan program which would provide $8.5 billion in loans annually, 

allocating lending authority among institutions on the basis of the financial need of their

students, and the extent to which institutions enroll and graduate higher numbers of Pell-eligible 

students, and offer an affordable and quality education such that graduates can repay their 

educational debt. This reform would replace the current program that is scheduled to terminate 

in 2014. When fully implemented, the new Perkins loan program would provide eight and a 

half times the current Perkins loan volume and expand institutional participation by up to 

an additional 2,700 postsecondary institutions. Savings resulting from this reform will be 

redirected to the Pell Grant Program, which, when added to surplus Pell Grant discretionary 

budget authority from the prior year, are sufficient to fund the program through the 2016-

2017 award year.

Rather than operating through institutional revolving funds, new Perkins Loans would be 

originated by institutions in the same manner as Federal Direct Student Loans; however, 

institutions would continue to have discretion with regard to student eligibility. By modernizing 

and expanding the program, more students in need of additional Federal financing options 

would have increased access to loan funds that carry important protections and benefits, 

including the ability to repay through income-based repayment plans and loan forgiveness 

options.

SEOG and Work-Study Allocation Formula Reform

Proposed reforms to the allocation formula for SEOG and Work-Study would redirect funding

from institutions receiving funds primarily based on historical funding levels to institutions that 

enroll and graduate higher numbers of Pell-eligible students, and offer an affordable and 

quality education such that graduates can repay their educational debt. Allocations to 

schools that fail to maintain a commitment to meeting these standards would be redistributed to 

better-performing institutions.

Assist Pell-Eligible Students with Specific Needs to Receive a Grant

The Budget proposes to make two small reforms to the Pell Grant program. First, it will 

strengthen academic progress requirements in the Pell Grant program in order to encourage 

students to complete their studies on time. Second, it would reinstate the Ability to Benefit 
STUDENT AID OVERVIEW

P-5

provision for students enrolled in eligible career pathways programs, which will allow

adults without a high school diploma to gain the knowledge and skills they need to secure a 

good job.

Reward Colleges for Results and Encourage States to Support Public Higher Education 

Reform and Performance

Building on the Administration’s 2020 goal of having the highest proportion of college graduates 

in the world, the College Opportunity and Graduation Bonuses program would provide funds for 

a new grant program that will reward colleges that successfully enroll and graduate a 

significant number of low- and moderate-income students on time and encourage all 

institutions to improve their performance. Additionally, the State Higher Education Performance 

Fund would encourage States to support, reform, and improve the performance of their 

public higher education systems. For more information on these programs, see the Higher 

Education account, beginning on page T-1.

STUDENT AID PROGRAMS OUTPUT MEASURES

Aid Available to Students 1

($ in millions)

Student aid program 2013 2014 2015

Pell Grants $32,352 $32,958 $33,877

Supplemental Educational Opportunity Grants 926 975 975

Federal Work-Study 1,100 1,159 1,159

Iraq and Afghanistan Service Grants2 0 0 0

New Student Loans:

Stafford Loans 27,398 26,226 25,984

Unsubsidized Stafford Loans 55,873 54,663 55,776

PLUS Loans 17,984 18,759 19,795

Perkins Loans 1,011 1,011 1,011

Unsubsidized Perkins Loans 0 0 4,113

TEACH Grants3 93 96 98

Subtotal, New Student Loans4 102,360 100,754 106,777

Total 136,738 135,847 142,788

NOTE: Detail may not add to total aid available due to rounding.

1 Shows total aid generated by Department programs, including Perkins Loan capital from institutional revolving 

funds, and institutional matching funds generated by the SEOG, and Work-Study programs. 2 Aid available under the Iraq and Afghanistan Service Grants program is projected at $236,000, $285,000, and 

$355,000, respectively, for fiscal years 2013, 2014 and 2015. 3 For budget and financial management purposes, this program is operated as a loan program under the Federal 

Credit Reform Act of 1990.

4 Does not include loans issued to consolidate existing loans (Consolidation Loans), which total $27,503 million 

in 2013, $25,447 million in 2014, and $26,963 million in 2015.
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Number of Student Aid Awards

(in thousands)

Student aid program 2013 2014 2015

Pell Grants 8,861 8,711 8,854

Supplemental Educational Opportunity Grants 1,545 1,627 1,627

Federal Work-Study 656 690 690

Iraq and Afghanistan Service Grants 1 1 1

New Student Loans:

Stafford Loans 8,525 8,069 7,944

Unsubsidized Stafford Loans 10,408 9,861 9,824

PLUS Loans 1,307 1,310 1,318

Perkins Loans 500 500 500

Unsubsidized Perkins Loans 0 0 766

TEACH Grants 32 34 34

Subtotal, New Student Loans 2 20,772 19,774 20,386

Total new awards 31,835 30,803 31,558

NOTE: Detail may not add to Total due to rounding.

1 Denotes number of recipients will not exceed 1,000. 2 Does not include loans issued to consolidate existing loans.

Number of Postsecondary Students Aided by Department Student Aid Programs

Number of recipients 2013 2014 2015

Unduplicated Count (in thousands) 13,395 12,852 12,838

PROGRAM PERFORMANCE INFORMATION

Performance Measures

This section presents selected program performance information, including, for example, GPRA 

goals, objectives, measures and performance targets and data; and an assessment of the 

progress made toward achieving program results. Achievement of program results is based on 

the cumulative effect of the resources provided in previous years and those requested in fiscal 

year 2015 and future years, as well as the resources and efforts invested by those served by 

this program.

Because Federal student assistance grant and loan programs rely on the same program data, 

performance indicators and strategies that apply to these programs are grouped here in the 

Student Aid Overview and are not repeated in justifications for the Student Financial 
STUDENT AID OVERVIEW

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Assistance or TEACH Grants Overview program accounts, or in the Student Loans 

Overview.

Goal: To ensure access to high-quality postsecondary education by providing financial 

aid in the form of grants, loans, and work-study in an efficient, financially sound, and 

customer-responsive manner.

Objective: Ensure that low- and middle-income students will have the same access to 

postsecondary education that high-income students do.

Measure: College enrollment rates: Postsecondary education enrollment rates will increase 

each year for all students, while the enrollment gap between low- and high-income and minority 

and non-minority high school graduates will decrease each year.

Targets and Performance Data

The percentage of high school graduates aged 16-24 enrolling immediately in college following high 

school.

Year Target: Total Percentage Enrolled Actual: Total Percentage Enrolled

2010 68.00% 68.10%

2011 68.00 68.20

2012 68.00

2013 68.00

2014 68.00

2015 TBD

Year

Target: Difference in the percentage of 

low- and high-income high school 

graduates ages 16-24 enrolling 

immediately in college

Actual: Difference in the percentage of 

low- and high-income high school 

graduates ages 16-24 enrolling 

immediately in college

2010 26.00% 31.50%

2011 25.75 28.90

2012 25.50

2013 25.25

2014 25.00

2015 TBD
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Measure: College enrollment rates: Postsecondary education enrollment rates will increase 

each year for all students, while the enrollment gap between low- and high-income and minority 

and non-minority high school graduates will decrease each year.

Targets and Performance Data

The percentage of high school graduates aged 16-24 enrolling immediately in college following high 

school.

Year

Target: Difference in the percentage of 

Black and White high school 

graduates ages 16-24 enrolling 

immediately in college

Actual: Difference in the percentage of 

Black and White high school 

graduates ages 16-24 enrolling 

immediately in college

2010 6.50% 8.50%

2011 6.25 1.20

2012 6.00

2013 5.75

2014 5.50

2015 TBD

Year

Target: Difference in the percentage of 

Hispanic and White high school 

graduates ages 16-24 enrolling 

immediately in college

Actual: Difference in the percentage of 

Hispanic and White high school 

graduates ages 16-24 enrolling 

immediately in college

2010 9.50% 10.80%

2011 9.25 1.70

2012 9.00

2013 8.75

2014 8.50

2015 TBD

Additional Information: The enrollment rate in postsecondary education immediately following 

high school has remained steady, slightly above the target of 68.0 percent. This metric has 

exceeded its goal for 4 consecutive years. More encouraging is the decrease in the difference 

between low- and high-income students who enrolled after high school, where the gap

decreased by 2.6 percentage point from 2010 to 2011. The Administration believes its 

commitment to the student financial assistance programs will continue to encourage and permit 

more low-income students to enroll in college – and provide them the means to remain in school 

– than would be the case in the absence of the student financial assistance programs.
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Additional Information (continued): There was a significant closing of the difference between 

Black and White high school graduates enrolling in college immediately after high school 

between 2010 and 2011, falling from 8.5 to 1.2 percent. There was a similar significant closing 

of the equivalent Hispanics of any race and White non-Hispanic students statistic, dropping to a 

less than 2 percentage point difference between the completion rates of these races. The 

Administration believes this progress is encouraging and it remains committed to furthering 

equal educational opportunity.

Data on these measures is taken from the “Digest of Education Statistics,” published annually 

by the National Center for Education Statistics. Fiscal year 2012 data will be available in early 

2014.
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Objective: Ensure that more students will persist in postsecondary education and attain 

degrees and certificates.

Measure: Graduation rate: Graduation rates for all first-time, full-time, degree-seeking students 

in 4-year and less than 4-year programs will improve, while the gap in completion rates between 

minority and non-minority students will decrease.

Targets and Performance Data

The percentage of first-time, full-time degree seeking students completing within 150 percent of the 

normal time required.

Year

Target: Students completing a 

4-year degree within 150 percent of the 

normal time required

Actual: Students completing a 

4-year degree within 150 percent of 

the normal time required

2010 60.00% 58.30%

2011 61.00 58.80

2012 62.00

2013 63.00

2014 64.00

2015 TBD

Year

Target: Students completing a less 

than 4-year degree within 150 percent 

of the normal time required

Actual: Students completing a less 

than 4-year degree within 150 percent 

of the normal time required

2010 40.00% 29.90%

2011 41.00 31.00

2012 42.00

2012 43.00

2014 44.00

2015 TBD
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Measure: Graduation rate: Graduation rates for all first-time, full-time, degree-seeking students 

in 4-year and less than 4-year programs will improve, while the gap in completion rates between 

minority and non-minority students will decrease.

Targets and Performance Data

The percentage of first-time, full-time degree seeking students completing within 150 percent of the 

normal time required.

Year

Target: Difference in the percentage of 

Black and White first-time, full-time 

students completing a 4-year degree 

within 150 percent of the normal time 

required

Actual: Difference in the percentage of 

Black and White first-time, full-time 

students completing a 4-year degree 

within 150 percent of the normal time 

required

2010 17.00% 22.00%

2011 16.70 22.20

2012 16.50

2012 16.25

2014 16.00

2015 TBD

Year

Target: Difference in the percentage of 

Hispanic and White first-time, fulltime students completing a 4-year 

degree within 150 percent of the normal 

time required

Actual: Difference in the percentage of 

Hispanic and White first-time, fulltime students completing a 4-year 

degree within 150 percent of the normal 

time required

2010 10.50% 11.40%

2011 10.00 11.10

2012 9.50

2012 9.00

2014 8.70

2015 TBD
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Measure: Graduation rate: Graduation rates for all first-time, full-time, degree-seeking students 

in 4-year and less than 4-year programs will improve, while the gap in completion rates between 

minority and non-minority students will decrease.

Targets and Performance Data

The percentage of first-time, full-time degree seeking students completing within 150 percent of the 

normal time required.

Year

Target: Difference in the percentage of 

Black and White first-time, full-time 

students completing a less than

4-year program within 150 percent of 

the normal time required

Actual: Difference in the percentage of 

Black and White first-time, full-time 

students completing a less than

4-year program within 150 percent of 

the normal time required

2010 5.80% 4.20%

2011 5.70 3.20

2012 5.50

2012 5.40

2014 5.30

2015 TBD

Year

Target: Difference in the percentage of 

Hispanic and White first-time, fulltime students completing a less than

4-year program within 150 percent of 

the normal time required

Actual: Difference in the percentage of 

Hispanic and White first-time, fulltime students completing a less than

4-year program within 150 percent of 

the normal time required

2010 1.30% 3.90%

2011 1.10 5.00

2012 1.00

2012 0.90

2014 0.80

2015 TBD

Additional Information: From 2010 to 2011, there were slight increases to overall graduation 

rates within 150 percent of the normal time for both 4-year (from 58.3 to 58.8 percent) and less 

than 4-year (from 29.9 to 31.0 percent) degree programs. Additionally, there was a decrease in 

the graduation rate gaps between Hispanic and White students at 4-year degree programs (0.3

percentage points), and between Black and White students at less than 4-year degree programs 

(1.0 percentage point).
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Additional Information (continued): In fact, in both 2010 and 2011, Hispanic students 

graduated from degree programs within 150 percent of the normal time at less than 4-year 

programs at a higher rate than White students (33.4 compared to 29.5 percent in 2010; 35.0 to 

30.0 percent in 2011). (Digest of Education Statistics 2012, Table 377)

The difference between Black and White students at 4-year degree programs increased 

marginally (from 22.0 to 22.2 percent). The Department is currently reassessing out-year 

targets for some measures.

Data on these measures is taken from the “Digest of Education Statistics,” published annually 

by the National Center for Education Statistics. Fiscal year 2012 data will be available in early 

2014.

Program Improvement Efforts

The Department is exploring ways to gather detailed program and student outcome data for

program-specific measures that will provide reliable indicators of program effectiveness. The 

fiscal year 2015 Budget includes funds under the Institute of Education Sciences to help States 

develop student-level data that could support the development of these measures for the 

student aid programs.

Efficiency Measures

The Department is reassessing the efficiency measures for the individual student financial aid 

programs. The results of this reassessment will reflect proposed program changes and be 

incorporated into future budget requests.