This baseline data is used primarily to project future deficits or surpluses, but also to project the impact of legislation on federal revenues. The CBO is also responsible for determining the baseline data used to assess the fiscal standing of the government under various criteria. Other funding legislation, such as emergency funding in response to a natural disaster, frequently occurs outside of the standard process.īoth the House and Senate set their own rules for how funding bills are handled, but the impact on federal revenue (known as the “score”) is determined by the Congressional Budget Office (CBO). Congress is tasked with producing a budget resolution and 12 appropriations bills for each federal fiscal year, which begins on October 1. In this way, federal student loans work somewhat like an entitlement program in that the government does not set an annual loan amount to provide, and the terms of the loans and students’ ability to borrow are set in law. Student loans have terms set through legislation and are dispersed directly to institutions on behalf of student borrowers, who are then obligated to repay the Treasury under the terms of their individual loan. Discretionary-funded programs have annual allocations that set the total level of funding they can provide within that fiscal year.Ī final category of funding of interest to campuses is federal student loans. The other category of funding is known as “discretionary spending.” Nearly all federal funding that reaches colleges and universities comes through discretionary programs, though the largest student aid program, Pell Grants, combines both mandatory and discretionary funding streams. In mandatory funded programs (like Social Security and Medicare), legislation defines the eligibility criteria for participation, and the government allocates funds to all who are eligible, regardless of the annual cost to the Treasury. The overwhelming majority of federal spending (in terms of the dollars disbursed) consists of “mandatory spending,” sometimes called entitlements. In the largest sense, the government funds a substantial and diverse range of programs and activities, from Pell Grants to scientific research to military operations. A small number of key concepts are important to understanding the federal funding process.
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