By cutting banks out of the financial aid process, President Barack Obama plans to make college more affordable so more Americans can compete in a global job market.
Obama announced his plan Friday to drop Family Federal Education Loans, private loans the government distributes through the banks, so that Americans can stop using a middleman to receive their financial aid.
“We have a student loan system where we’re giving lenders billions of dollars in wasteful subsidies that could be used to make college more affordable for all Americans,” Obama said at an April 24 White House press conference to announce his plans.
Americans pay the banks $48 billion in taxes each year to be involved in the process, according to The Associated Press.
Obama said he will use that private loan money to expand loans students receive directly from the government8212;primarily the Pell Grant Program, which U President Michael Young said last March that students are underutilizing each year. Students apply for the need-based Pell grants by filling out the Free Application for Federal Student Aid.
The Pell grant’s value will be fixed to match the rise and decline of inflation, instead of Congress setting its value each year, and the maximum amount the grant can award will be increased by $500, so more students can pay for college.
“Tuition has grown 10 times faster than a typical family’s income, putting new pressure on families that are already strained and pricing far too many students out of college altogether,” Obama said.
Most states, including Utah, slashed higher education funding between 8 and 15 percent in response to the recession, according to the Center on Budget and Policy Priorities. In a domino effect, the U had to increase in-state tuition by about $233 and out-of-state by $777.
Students such as Benjamin Shumway, a junior in computer science, welcome the thought of more financial aid8212;help that unlike loans, doesn’t need to be paid back. Shumway, a New York native paying out-of-state tuition, was planning on joining the Army Reserves to pay for college.
“This trend8212;a trend where a quality higher education slips out of reach for ordinary Americans8212;threatens the dream of opportunity that is America’s promise to all its citizens,” Obama said.
Some U students who are eligible for Pell grants don’t apply, either because they assume they’re ineligible or aren’t aware of them, said Paul Brinkman, associate vice president of budget and planning. Brinkman was unable to say how many eligible students don’t take advantage of the grants.
Young said the U would make a concerted push through letters and public notices to make students aware of Pell grants so that not a penny of financial aid goes untapped in a time of costly tuition hikes.
The U is also putting $700,000 more toward its own need-based financial aid programs for next year.
Obama’s plan is a good start, but Randy Dryer, chair of the U’s Board of Trustees, wants to see more.
“Increasing the Pell grants is positive and helpful, but that alone isn’t going to address the problem,” Dryer said. Regaining lost ground in a graduation rate comparison is good, but where Americans have slipped most significantly is in math, science and engineering, Dryer said. There needs to be a strong push to improve departmental scholarships within the sciences as well, he said.
Harsher critics of the president’s plan, lobbyists for banks and private lenders, will debate the president during the next few weeks to keep the financial aid system as it is.
Opponents make the argument that increasing the value of Pell grants will give colleges incentive to increase their tuition, since more students can afford to pay it, according to The Chronicle of Higher Education.
Obama promised to argue that point and fight the banks and special interests on behalf of every student who wants to earn a college degree, but is held back by financial constraints.
“And for those who care about America’s future, this is a battle we can’t afford to lose,” he said.