How the New Government Spending Bill Could Affect Student Loans

The continuing resolution-omnibus spending bill, known as the "cromnibus," has yet to pass into law. With that said, things seem to be moving at a fairly good pace toward that end, and it is very likely to be passed before the deadline.

Remember the government shutdown this time last year? Republican lawmakers do, and seem to be making a concerted effort to avoid a repeat of that event.

Learn [how a Republican-led Congress could steer student loan policy.]

The funding agreement as it was announced mostly leaves education spending at last year's levels, but there are a few changes college students and student loan borrowers may want to be aware of.

1. The ability to benefit provision returns: This provision is probably the most significant change in the new education appropriations bill. Until 2012, students without a high school diploma or GED could still qualify for federal financial aid by either passing an exam known as an ability to benefit test or by successfully completing at least six credits in a degree or certificate program.

Congress eliminated this provision via another appropriations bill back in 2012 . The proposed bill restores the ability to benefit rule, but limits its use to students enrolled in career pathway programs at community colleges.

Make a [plan to limit your need for student loans.]

2. Program funding levels see little change: While Pell Grant advocates were concerned over a proposal that would have used $2 billion of the current $4 billion Pell program surplus to fund other programs, in the end only a little more than $300 million changed budgetary lines. President Barack Obama's First in the World program, which promotes innovation in higher education, also fell victim to cuts, going from $75 million to $60 million. Much of that money will be used by the Department of Education to pay not-for-profit federal loan servicers, while the rest provides slight increases to several other student aid programs.

The federal work-study program will see an increase of $15 million, while TRIO will grow by only $1.5 million and federal supplemental educational opportunity grants will remain at their current funding level of $733 million. While the Pell surplus was pirated a bit, the actual award maximum will increase for the next academic year as scheduled, from $5,730 to $5,830.

While the bill saw primarily level funding, there was still room for some "new" programs. Five million dollars were set aside to fund a program for veterans that hasn't seen funding in almost five years. The program provides support for veterans on college campuses. Another $2.5 million will be used to set up a new program to create a national center for disabled students.

Here's [what to know about Obama's new student loan plan.]

3. What got left out: What may be most notable about this appropriations bill is what it didn't contain. There was some fairly significant concern going in to this process other programs in addition to Pell Grants would fall victim to cuts. Subsidized Stafford loans, for example, have seen cuts within the last several years, leaving eligibility limited to undergraduate students only and for a limited time frame.

Obama's recent executive order to expand the Pay As You Earn repayment plan was also rumored to be on the chopping block, as was the controversial college ratings system. The Student Loan Ranger suspects this is likely due in part to a Republican desire to avoid the political consequences of another government shutdown and therefore trying to keep the controversial proposals to a minimum and making the bill as easy to approve as possible.

While student loan consumers won't see many changes from this bill, many more modifications to federal aid and student loan laws could be on the horizon. Most higher education wonks feel that 2015 will see a reauthorization of the Higher Education Act, and perhaps some significant alterations to higher education and student aid policies.

Betsy Mayotte, director of regulatory compliance for American Student Assistance, regularly advises consumers on planning and paying for college. Mayotte, who received a B.S. in business communications from Bentley College, is a frequent contributor to ASA's SALT Blog; responds to public inquiries via the advice resource "Just Ask;" and is frequently quoted in traditional and social media on the topics of student loans and financial aid.