Proposed higher ed. reforms face obstacles

TEMP ORARY February 12, 2012 0

In the State of the Union address, President Barack Obama’s announcement about higher education initiatives to make college more affordable to Americans immediately drew applause from the audience. His proposals include plans to reduce interest rates on student loans and extend popular tax credits. “Higher education can’t be a luxury—it’s an economic imperative that every family in America should be able to afford,” Obama asserted.

Facing high levels of debt, the federal government itself is unable to fight the high increase in college tuition. Therefore, in his speech, the President requested the participation of the states and post-secondary education institutions in the battle: “It’s not enough for us to increase student aid,” he said. “We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money. States also need to do their part, by making higher education a higher priority in their budgets. And colleges and universities have to do their part by working to keep costs down.”

Additionally, Obama put colleges and universities, whose tuition has been rising in recent years, on notice: “If you can’t stop tuition from going up, the funding you get from taxpayers will go down.” Indeed, Obama desires to put a halt to the outrageous rising cost of college tuition, which is normally three percent above the inflation rate. He called on Congress to thwart the plan to double the interest rate on federal student loans to 6.8 percent in July and proposed a twofold increase in federal work-study jobs in the next five years. Moreover, he demanded to make the American Opportunity Tax Credit permanent, which provides up to $2,500 for tuition expenses.

Mark Kantrowitz, the publisher of FinAid.org, thought Obama’s proposals would benefit low-income and middle-income students, who were more likely to be hit by the wild escalation of tuition and interest rates on federal student loans. The President, to some extent, targeted his initiatives at the middle class, who were more likely to vote in the upcoming presidential election. In my opinion, the proposals can be considered an important step in his re-election scheme, while Republican candidates are aiming criticisms at his administration.

Kantrowitz doubted the success of Obama’s reforms because they might cost the government around $6 billion in order to keep the interest rate on subsidized loans at the current 3.4 percent and double the work-study program altogether. In this tough time for the economy, it is uncertain where the money would come from. Even though he was pleased with the President’s focus on higher education problems and support for financial aid programs, Justin Draeger, president of the National Association of Student Financial Aid Administrators, shared Kantrowitz’s viewpoint on the matter, saying: “Given the fierce budget battles that have been waged so far in the past two years, there’s a high amount of doubt that the interest rate can be kept down.”

Another obstacle to the President’s proposals is the ambiguity of how the states will be held responsible for assisting the federal government in the fight against the shocking increase in college tuition. In her article “On Notice” on Inside Higher Ed, Libby A. Nelson wrote: “How states would be held accountable was not clear. One possibility is permanent ‘maintenance of effort’ requirements, which in the stimulus bill forced states to keep higher education funding at a certain threshold in order to be eligible for federal grants. While the threat to colleges was more direct, just what federal funds might be withheld remained an open question.” Nelson cited the opinion of Terry Hartle, senior vice president for government and public affairs at the American Council on Education, on the issue: “What I’m struck by is how little we know about what the administration intends, even after the speech has concluded.”

As a college student, I was really happy when hearing about Obama’s proposals to reduce interest rates on student loans, extend popular tax credits and make college affordable for American families. However, it is unlikely that the initiatives will be carried out in the near future due to difficulties that the government is encountering, especially high levels of debt and the conflicts between Republican and Democrat members of Congress. Moreover, if President Obama loses the presidential election of 2012, his proposals may fall into obscurity. Even if the President gets re-elected, it will take him time to pass the bills through Congress since keeping college costs low appears to be a bipartisan applause line. However, cutting the interest rate seems to draw approval largely from Democrats. Anyway, we should be hopeful for a better future.

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