President Obama Proposes an Increase of Over $10 Billion Per Year in Education Grants and Loans

During his State of the Union address, President Barack Obama announced a plan to make college more affordable. The plan calls for billions of dollars a year extra in federal grants for low interest loans, work study programs, better spending of education dollars, and new tools to help students figure out which colleges provide the most educational value.

The president first announced the outlines of the financial aid proposal during Tuesday’s State of the Union address. His plan targets what is known as “campus based” aid given to colleges to distribute in areas such as Perkins loans or in work study programs. Of the $142 billion in federal grants and loans distributed in the last school year, about $3 billion went to these programs. His plan calls for increasing that type of aid to $10 billion annually.

He also wants to create a “Race to the Top” competition in higher education similar to the one his administration used on K-12 to encourage states to better use higher education dollars in exchange for $1 billion in prize dollars. A second competition called “First in the World” would encourage innovation to boost productivity on campuses.

Obama is also pushing for the creation of new tools to allow students to determine which colleges and universities have the best value.

Some in the higher education community are nervous that the Obama administration could be setting a new precedent in the federal government’s role in controlling the rising costs of college. Following the speech, Molly Corbett Broad, president of the American Council on Education, issued a statement saying there’s concern that the proposal would “move decision-making in higher education from college campuses to Washington, D.C.”

Sen. Lamar Alexander, R-Tenn., a former education secretary, said the autonomy of U.S. higher education is what makes it the best in the world, and he’s questioned whether Obama can enforce any plan that shifts federal aid away from colleges and universities without hurting students.

“It’s hard to do without hurting students, and it’s not appropriate to do,” Alexander said. “The federal government has no business doing this.”

But Obama education secretary, Arne Duncan, said Friday that institutions of higher learning should get federal dollars based in part on their performance.

“Historically, we’ve funded universities whether or not they’ve done a good job of graduating people, whether or not they’ve done a good job of keeping down tuition,” Duncan said on MSNBC’s “Morning Joe.”

Rep. George Miller, D-Calif., the ranking member of the House Education and Workforce Committee, said there is bipartisan concern in Congress about the rising costs of college, and he’s hopeful the president’s plan will open up a dialogue about the problem. Some Republicans in the past, including Rep. Buck McKeon, R-Calif., have offered proposals similar to the president’s.

The administration has already taken a series of steps to expand the availability of grants and loans and to make loans easier to pay back. During the State of the Union, Obama spelled out other proposals to make college more affordable, such as extending a tuition tax break and asking Congress to keep loan interest rates from doubling in July.

via Yahoo News

Topics: College Grants, Education Grants, Federal Student Loans, Financial Aid, Pell Grants

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