Last night while you were sleeping, the U.S. government shut down briefly, reopened again, then passed a new budget deal.
This was the second government shutdown in just two weeks, occurring despite bipartisan support for a controversial budget deal to keep the government running through 2019.
Although the budget bill eventually passed the U.S. Senate and House of Representatives, a filibuster by Republican Sen. Rand Paul lamenting a rise in the deficit prevented the bill from passing before midnight. This lead to the shortest government shutdown ever — about five and a half hours long.
Now that the budget deal has been signed by President Donald Trump, here’s what you need to know about it, including how it affects students and taxpayers.
Just how massive is the budget compromise bill?
The budget compromise legislation provides a budget framework for fiscal years 2018 and 2019. The two-year budget agreement exceeds 2011 spending caps on defense and nondefense spending by around $300 billion.
The president tweeted his excitement about signing the new budget deal.
Just signed Bill. Our Military will now be stronger than ever before. We love and need our Military and gave them everything — and more. First time this has happened in a long time. Also means JOBS, JOBS, JOBS!
— Donald J. Trump (@realDonaldTrump) February 9, 2018
The new budget deal also provides almost $90 billion in disaster relief for Puerto Rico, the U.S. Virgin Islands, Florida, and Texas.
Congress now has permission to spend $500 billion more throughout the next two years, adding an estimated $320 billion to the deficit. The debt ceiling will also be suspended until March 2019.
Lawmakers, working within the framework set out within the budget compromise, will have until March 23 to draft a $1.3 trillion omnibus spending bill. Once this appropriations bill is set into law, it will keep the government funded until September 2019.
How students and taxpayers are affected by the new budget deal
For taxpayers, the new budget deal includes:
- A retroactive extension of tax cuts providing mortgage debt relief
- Deductions for private mortgage insurance
- Deductions and credits for green energy projects
The new budget deal also retroactively reinstated the Tuition and Fees deduction, which had expired at the end of the 2016 tax year. The deduction had previously permitted qualifying taxpayers to deduct up to $4,000 in eligible tuition expenses paid throughout the year by the taxpayer, or by the taxpayer’s spouse or dependent.
With the Tuition and Fees deduction, taxable income can be reduced by as much as $4,000 if modified adjusted gross income does not exceed more than $80,000 for single filers or $160,000 for joint filers.
Thanks to the two-year budget bill, students no longer need to worry about whether a government shutdown will affect federal student loan approvals, financial aid disbursements, or higher education grants until the end of the 2019 fiscal year.
- $4 billion for college affordability programs designed to help firefighters, police officers, and teachers afford the cost of college.
- Preservation of student loan repayment programs for health providers in underserved populations.
- Preservation of funding for training hospitals where new medical students complete their residencies.
Big increases in spending for domestic programs and the military
Domestic programs will receive an additional $63 billion this fiscal year and an additional $68 billion next year. This includes billions of additional dollars for:
- Rebuilding veterans’ hospitals
- Fighting opioid addiction
- Abstinence education
- Disaster relief
- Two years of funding for community health centers
There’s also an additional four-year extension of the Children’s Health Insurance Program (CHIP). The program is now funded for 10 years.
The new budget also prevents several cuts to Medicare and Medicaid that would have occurred had the spending caps not been lifted.
Where does Congress go from here?
Although the new budget compromise contained something for everyone, many Democrats and Republicans in Congress expressed their displeasure with it.
Many Republicans in Congress objected to the government spending increases, while the House Freedom Caucus tweeted:
Official position: HFC opposes the caps deal. We support funding our troops, but growing the size of government by 13 percent is not what the voters sent us here to do.
— House Freedom Caucus (@freedomcaucus) February 8, 2018
For many Democrats in Congress, the biggest problem with the two-year budget bill is the loss of leverage necessary to protect undocumented immigrants at risk of deportation.
President Trump stated that March 5 would mark the end of an Obama-era program titled Deferred Action for Childhood (DACA) arrivals. DACA authorizes temporary legal status and provides work permits for undocumented immigrants, often called Dreamers, who meet qualifying requirements including being brought to the U.S. as children.
“Anyone who votes for the Senate budget deal is colluding with this President and this Administration to deport Dreamers,” said Rep. Luis V. Gutiérrez, a Democrat from Illinois, in a statement. “It is as simple as that.”
Now members of Congress will wait and see if Republican Senate Majority Leader Mitch McConnell and Republican House Majority Leader Paul Ryan deliver on their promises to bring up legislation related to DACA to a vote before March 5.
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of March 18, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 0318/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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