College Affordability Act Costs Released

The Congressional Budget Office (CBO) released the cost estimate, or CBO score, for the College Affordability Act (CAA), as passed by the House Education and Labor Committee.
 
The CBO score shows the CAA increases mandatory (entitlement) spending by $332 billion over 10 years and increases the authorization appropriated (annual) funding by $150 billion over five years.
 
The CBO score is an important part of the legislative process, as rules require legislation to show costs to the government before coming up for a vote in either chamber of Congress.  Budget rules also require that legislation cannot increase the deficit, so a bill moving to the floor needs to be “paid for” with offsetting savings. The only provision in the CAA that generates savings is one allowing students with private loans to consolidate their balances into federal loans, which would save the government $5 billion in the first five years. 
 
To find additional offsetting savings, the bill has been referred to the Ways and Means Committee, which generally has jurisdiction over tax issues. Unless Congress votes to waive the budget rules, the CAA will need to be “paid for” before coming up for a House or Senate vote.
 
To meet the budget rule, the $332 billion over 10 years will need to be paid for with legislative changes generating that amount of savings, otherwise it will be counted as raising the deficit by that amount over 10 years.  The $150 billion in appropriated funding is an estimate for what programs and provisions would cost if Congress chooses to provide that much in appropriations bills each year.
 
The details of the costs of major provisions in the CAA show that of the $332 billion total, student loan costs would increase by $170 billion over 10 years, while mandatory increases for the Pell Grant program would total $83 billion. The new America’s College Promise program, providing for free community college, would cost $60 billion over 10 years.  All of these programs have expanded access and eligibility which means more students will be receiving more aid if the bill is enacted.
 
Other provisions and their costs include:

• Increasing the mandatory add-on for Pell Grants: $69 billion
• Providing subsidized graduate loans: $22 billion
• Eliminating origination fees: $18 billion
• Expanding PSLF: $16 billion
• Allowing borrowers to refinance student loans: $13 billion

The public release of the CBO score is an indication of the priority the House puts on consideration of CAA.

For more information, please contact:
Stephanie Giesecke