In Ann Arbor, Obama Releases Plans for College Aid Reform
by Nicole Leonard | Boston University
In the State of the Union Address on Tuesday night, President Obama addressed the critical issues of higher education and student debt before members of Congress and the citizens of the United States.
The President recognized the intense struggle among college students to afford rising tuition, and the difficulty to pay back loans. He even announced that, “Higher education can’t be a luxury -– it is an economic imperative that every family in America should be able to afford.”
On Friday morning, Obama further outlined his plan to reduce college debt and increase student aid at the University of Michigan in Ann Arbor. The President made a point to expand on the proposals from his Tuesday speech.
The Obama administration has put together an agenda that includes increasing the allotted amount for Perkins loans from $1 billion to $8 billion. In addition, the president wishes to set up competition programs at the state and college levels, totaling $1 billion and $55 million, respectively.
The overall goal of the plan is to bring down the cost of higher education and provide incentives for states and colleges to reduce the cost of tuition. It is also important that an effort be made to slow the rising interest rates on student loans.
One objective of President Obama’s plan is to keep the interest rate on Federal Direct Stafford Loans at its current 3.8%. Stafford loans, which are used by many students in a college or university, usually contain an increase in interest from year to year, and therefore cause students to repay more once they graduate.
Another item the President is keen to implement is a guide for students and families to more easily understand and compare aid from college to college. This would require universities and colleges to put together post-graduate earnings and employment information for families to evaluate future success rates.
While President Obama is eager to develop programs and give more money towards student aid, he recognizes that in order for the financial aid system to improve, cooperation must be established at the state level. As he said in his speech Tuesday, “States also need to do their part, by making higher education a higher priority in their budgets.”
Administration officials claim that the additional money provided for loans, such as the Perkins loan, would not necessitate new taxes. As a result of the new proposal, the approximately 1,700 colleges that offer the Perkins loan would increase to an estimated 4,000.
Among students, proposed changes in requirements for colleges to receive more funds for work-study and Supplemental Education Opportunity Grants seem to be popular. However, doubling work-study jobs and capping interest rates could result in high expenses for the government.
The increase in student aid could also produce some unwanted consequences, like larger class sizes. Questions still remain as to how many facets of the proposal will be executed correctly if Congress decides to pass it.
Over the coming weeks, students will still want to learn more about when the plan will be effective if it passes; if current college students will even be able to reap the benefits of the new financial aid system; and how much of the money proposed will actually be seen in financial aid packages that are awarded in the future.Nicole is a sophomore at Boston University, where she is studying journalism and psychology.