Student Loan debt

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The legislative Joint Budget Committee made its single largest cut in trying to find $2 billion in savings for the 2020-21 state budget by voting Tuesday to remove 58% of the general fund support for the public colleges and universities.

Lawmakers voted to go much further than committee staff had been suggesting.

At the beginning of the budget-cutting exercise on May 4, the staff had presented 10% and 20% across-the-board cuts, and they received information Tuesday what a 30% general fund cut, or $246.8 million, would look like. Even though staff analyst Amanda Bickel did not recommend it, that was “the level of cut that may be required for budget balancing,” she said.

Bickel told the JBC that colleges and universities within the Department of Higher Education are among the few state agencies that could sustain such cuts because those funds represent a small portion of most state college and university budgets, which rely more heavily on tuition revenue.

Sen. Dominick Moreno, D-Commerce City, made the motion to cut 58%, a figure not contained in Bickel’s recommendations.

He was asked several times to repeat his motion. “And how much is that?” asked Sen. Bob Rankin, R-Carbondale. The answer: $493.2 million. The cut would be distributed proportionately to the state’s governing boards and stand-alone colleges and universities.

The motion passed unanimously without opposition, but reaction on social media was swift and shocked.

“This is devastating. I’m speechless,” tweeted Jen Greenfield, an assistant professor in the Graduate School of Social Work at the University of Denver.

Peg Perl, the election chief for Arapahoe County and mother to a “rising senior” (a student who will be a high school senior in the fall) simply tweeted ”gulp.”

Bickel suggested allowing the institutions, particularly community colleges and Metropolitan State University of Denver, flexibility in tuition increases. Tuition for 2020-21 had been capped at a 3% increase. However, the JBC voted to keep the tuition hikes at that same 3%.

The JBC also looked again at financial aid, which is 20% of the general fund sent to higher education. That’s made up of three pots: need-based, merit and work-study aid. The committee had voted to eliminate the $5 million for merit-based aid but spared need-based and work-study funding.

The committee cut funding for an opioid awareness campaign and on Tuesday cut funds for cannabis research. On May 7, the JBC had cut scholarship funds, teacher development and educator loan forgiveness grants.

And while higher education is in line for coronavirus relief money, those funds can only be used to address direct costs from impacts of the virus, such as online learning and sanitation efforts. It cannot be used to backfill budget cuts, according to federal guidance.

A U.S. Treasury memo, issued April 22, provided guidance to states on how CARES Act money should be spent. It states that “funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute. Although a broad range of uses is allowed, revenue replacement is not a permissible use of Fund payments.”

Higher education has been a reliable piggy bank for budget cuts in past recessions. In 2009, institutions dodged some of the pain in the most recent recession with stimulus funds, but Colorado is 48th in the nation for state funding. Bickel had said that enrollment is a better indicator of how well colleges and universities fare in 2020-21, saying some are anticipating enrollment declines of up to 30%.

In 2000, the state picked up about 68% of the cost of a college education. Tuition covered the rest. After two multi-year recessions, after 9/11 and the Great Recession, that number has flipped, with students and parents covering two-thirds of the cost and the state covering the rest. One estimate said that tuition at state colleges and universities increased about 60% between 2008 and 2018.

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