If you follow what鈥檚 going on in Washington, you know that the Trump administration is primed to pursue big changes in federal taxes and spending through a process called 鈥渂udget reconciliation鈥� (most recently used to pass the Biden administration鈥檚 鈥淚nflation Reduction Act鈥�). Budget reconciliation, used 23 times since it was created by the 1974 Congressional Budget and Impoundment Act, could have enormous implications for school spending, student lending, and school choice. But what exactly is it? How does it work? And what鈥檚 this mean for schools? There are few who can answer these questions better than Lindsay Fryer, the president of Lodestone DC, who鈥檚 worked on both the House and Senate education committees and who served as the Senate鈥檚 lead negotiator on the Every Student Succeeds Act. So, I thought I鈥檇 hit her up for some insight into what鈥檚 ahead with reconciliation. Here鈥檚 what she had to say.
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Rick: For those of us who aren鈥檛 up to speed on the details of federal lawmaking, what is budget reconciliation anyway?
Lindsay: The budget-reconciliation process is an expedited, easier way to legislate on taxes, spending, or the debt limit. Reconciliation bills can only address 鈥渕andatory鈥� spending like Social Security and Medicare. This means that discretionary K-12 programs like Title I鈥攁imed at disadvantaged students鈥攁nd the Individuals with Disabilities Education Act probably won鈥檛 be affected. Instead, the education programs most likely to be affected are federal student loans and perhaps a portion of Pell Grants. Reconciliation matters so much because it isn鈥檛 subject to the Senate filibuster, which requires 60 votes to pass legislation. With reconciliation, the House and Senate can act with a simple majority. Given that Republicans have 53 seats in the Senate and a House majority, they have the ability to pass ambitious changes to the student-loan system and repeal some of Biden鈥檚 student-loan regulations or to enact a federal school choice tax credit via reconciliation.
Rick: OK, so how does this all actually work?
Lindsay: The reconciliation process starts with the passage of something called a congressional budget resolution, which provides a budget plan and can instruct House and Senate committees to alter mandatory spending, tax revenue, or the federal debt limit. Reconciliation instructions don鈥檛 detail what specific changes a committee should adopt to meet its budget targets鈥攖hat鈥檚 up to each committee. The reconciliation instructions make it possible to adopt major changes to mandatory spending or taxes with a bare Senate majority, which is how major reforms in the education space have passed previously.
Rick: Where did this whole reconciliation process come from, anyway?
Lindsay: It was created by the , which was a response to growing tensions between Congress and the presidency over spending. In 1973, President Richard Nixon refused to spend funds that Congress had appropriated鈥攁 practice known as 鈥渋mpoundment.鈥� This raised concerns about the balance of power between the executive and legislature. Congress also sought to centralize its budget process, addressing fragmented decisionmaking that made it hard to set cohesive fiscal priorities. The act was intended to help with all of this, which is why it created the House and Senate Budget Committees and the Congressional Budget Office to provide nonpartisan analysis of budget and economic issues.
Rick: What are some examples of significant legislation that have been passed using reconciliation?
Lindsay: Over the past 50 years, 23 budget reconciliation bills have been enacted. The example that may be most relevant to this audience is the passage of the Health Care and Education Reconciliation Act of 2010 by a Democrat-controlled Congress that made significant changes to Obama鈥檚 signature Affordable Care Act and dramatically modified the federal student-loan program by transitioning the program to a fully direct loan system. This allowed the government to directly issue loans to students instead of private banks and other financial institutions that were subsidized for issuing loans. In 2018, a Republican Congress and President Donald Trump enacted the via reconciliation. Another example is the (ARP), passed via budget reconciliation by a Democrat Congress and signed into law by President Joe Biden in 2021. ARP was a $1.9 trillion package of emergency assistance measures to assist with COVID-19 recovery, including unprecedented spending for education, specifically $122 billion for the Elementary and Secondary School Emergency Relief (ESSER) fund. Most recently, reconciliation was used by the Democrats to pass the in August 2022.
Rick: OK, so how is reconciliation going to work this year?
Lindsay: There鈥檚 ongoing among Republicans as to whether to take a one- or two-step approach to reconciliation in 2025. A two-step approach, supported by Senate Majority Leader John Thune, might address border security and energy production early this year, followed by tax policy later in 2025. Other leaders, like Speaker of the House Mike Johnson, suggest doing one bill to combine all the priorities. President Trump has indicated that he favors this approach but is also open to a two-step process. So we will have to wait and see.
Rick: Can the Republicans abolish the Department of Education through reconciliation?
Lindsay: That would be highly unlikely. Reconciliation is limited to provisions that directly affect federal revenue or spending. Reorganizing or eliminating federal agencies are nonbudgetary items. Any attempt to abolish the department would likely be ruled extraneous under the , which requires that reconciliation measures be tied to the federal budget. If a senator believes a provision in reconciliation violates the Byrd Rule, he or she can raise a point of order. When this happens, the Senate parliamentarian will issue a ruling. If the parliamentarian agrees with the point of order, the provision is struck from the bill unless the ruling is waived by 60 votes. If the Republicans had those votes, they wouldn鈥檛 need to turn to reconciliation鈥攖hey could just eliminate the department via stand-alone legislation.
Rick: Can the Republicans use reconciliation to cut spending on Title I or special education? Are they likely to?
Lindsay: No, as mentioned above, reconciliation bills can only deal with mandatory spending. Title I and special education funding is discretionary, so they cannot be cut via reconciliation. This also means that proposals to block grant or change the formulas for these programs cannot be part of the reconciliation process. However, Congress could infuse one-time mandatory funds for one or both of these programs as part of a 鈥渟pending鈥� reconciliation bill. Or it could create a new block grant to states for special education or underserved students, for example, but it cannot cut the existing programs. I have not heard these ideas for new programs being discussed, but this action would be allowed under reconciliation.
Rick: There鈥檚 been talk about federal school choice legislation. Could that be done through reconciliation, and what would that look like?
Lindsay: A brand-new mandatory school choice program, such as a federal education savings account or voucher program, could be passed via reconciliation. However, as we鈥檝e seen in the past, even getting a simple majority of Republicans for this type of school choice program can be hard. What is more likely to be included is a federal school choice tax credit, such as the one designed in the (ECCA). As a tax provision, this action would be germane to a reconciliation bill. The ECCA bill would create a new tax credit for individuals or corporations that make charitable contributions to tax-exempt organizations that provide scholarships to K鈥�12 students to attend a school of their choice. This bill is very popular, with 155 co-sponsors in the House and 31 in the Senate, including new Majority Leader Thune. House and Senate leadership has been vocal about including this type of tax credit in reconciliation, so this legislative action supporting school choice is one to watch.
Rick: Can Congress change federal policy relating to issues like DEI or transgender accommodations through reconciliation?
Lindsay: That鈥檚 very unlikely, as these would be considered policy changes and subject to a point of order. However, suppose Congress decided to create a new mandatory education program and wanted to include conditions on spending, for example, around DEI policies. In that case, it is possible this could pass depending on how the program is crafted, ensuring it does not violate civil rights statutes. I haven鈥檛 heard any discussion of new education spending as part of a reconciliation at this point, but we shall see.
Rick: Is reconciliation likely to include any changes to postsecondary borrowing or Biden鈥檚 student-loan-forgiveness plans?
Lindsay: The biggest mandatory education spending programs are federal student loans and a portion of the Pell Grant program. So, if the education committees get reconciliation instructions to produce savings, student-loan reform is likely to be part of the conversation. Historically, major changes to the student-loan program have happened via budget reconciliation, most notably in 2010. The House Education and Workforce Committee has passed reforms to student loans via the , which means there鈥檚 a blueprint for some changes that could be considered via reconciliation. It鈥檚 also the case that repealing Biden regulations on student loans, such as the Saving on a Valuable Education (SAVE) plan, might produce mandatory savings. So, I鈥檇 expect student loans and potentially broader higher education changes to be part of the reconciliation conversation.
Rick: What鈥檚 the timeline on which all this is likely to happen?
Lindsay: House Speaker Johnson has laid out an ambitious timeline under a one-bill approach. He is hoping to pass a budget resolution by February and then complete the subsequent reconciliation process with all the relevant committees to bring a final bill for a vote in the House by April. We鈥檒l see if they can meet these deadlines, but the speed will also depend on whether they decide to pursue one bill or two. Either way, this process takes time and will require a careful strategy given the slim Republican majority in both chambers. There are certainly divides in the Republican Party over how to address the border, energy, tax cuts, and student loans, so I鈥檇 expect a lot of negotiation over these items over the course of the next year. There are also competing priorities that Congress has to deal with, such as the debt limit, annual appropriations to be passed by March 14, and Cabinet nominations in the Senate. I鈥檇 be ready for an action-packed year but one that could see significant changes to education!
