Student Loan Issues

Several items hit the inbox today concerning student loans.

According to the White House:

Americans now owe more tuition debt than credit card debt, and student loan borrowing is more common now than it was a decade ago. At a time when the average student loan debt is $25,000 and tuition prices continue to rise, students are borrowing more than ever to complete their degrees.

 

On July 1, 2012, the interest rates on subsidized Stafford student loans are slated to double from 3.4% to 6.8%. To out-educate our global competitors and make college more affordable, Congress needs to stop the interest rate on these student loans from doubling.

 

If Congress doesn’t act before July 1, 2012, interest rates on loans for over 7.4 million students will double. And for each year that Congress doesn’t act, students rack up an additional $1,000 in debt over the life of their loans.

 

As he did in his State of the Union address, President Obama is calling on Congress to put forward legislation to stop interest rates from doubling. The President is calling on Congress to reward hard work and responsibility by keeping interest rates on student loans low so more Americans get a fair shot at an affordable college education, the skills they need to find a good job, and a clear path to the middle class.

That same email gave state data numbers.  There are 393,582 Pennsylvanians with Stafford student loans, with an estimated savings per borrower over the life of the loan at $1,008, for a state total of $396,732,672.00. 


The President is also making a series of suggestions on ways to make college more affordable:

·         Reforming student aid to promote affordability and value:  To keep tuition from spiraling too high and drive greater value, the President has proposed reforms to federal campus-based aid programs to shift aid away from colleges that fail to keep net tuition down, and toward those colleges and universities that do their fair share to keep tuition affordable, provide good value, and serve needy students well. These changes in federal aid to campuses will leverage $10 billion annually to help keep tuition down. 

 

·         Creating a Race to the Top for college affordability and completion: The President has proposed incentives for states to maintain their commitments to higher education through a new $1 billion investment.  The Race to the Top: College Affordability and Completion challenge aims to increase the number of college graduates and contain the cost of tuition by rewarding states that are willing to systematically change their higher education policies and practices. 

 

·         Kicking off a First in the World competition to model innovation and quality on college campuses:  The President is proposing an investment of $55 million in a new First in the World competition, to support public and private colleges and non-profit organizations as they work to develop and test the next breakthrough strategy that will boost higher education attainment and student outcome, while leading to reduced costs.

·         Providing better data for families to choose the right college for them: The President is calling for a College Scorecard for all degree-granting institutions, designed to provide essential information about college costs, graduation rates, and potential earnings, all in an easy-to-read format that will help students and families choose a college that is well suited to their needs, priced affordably, and consistent with their career and educational goals.

 

·         Redoubling federal support to tackle college costs:  The President has already made the biggest investments in student aid since the G.I. Bill through increases to the Pell grant, and by shoring up the direct loan and income-based repayment programs. In his State of the Union Address, the President also called on Congress to make the American Opportunity Tax Credit permanent and double the number of work-study jobs over the next 5 years to better assist college students who are working their way through school. 

 

Building on Landmark Federal Investments to Make Higher Education More Affordable

 

The President has set the goal for the U.S. to be first in the world in college attainment by 2020. To achieve this bold goal for our nation’s future and to prepare students to compete in the 21st century global economy, the Obama Administration has championed landmark investments in student financial to make college more affordable for all American families: 

 

·         Increasing Pell Grants: The President has raised the maximum Pell Grant award to $5,635 for the 2013-14 award year – a $905 increase since 2008. The number of Pell Grant recipients has increased over that same time by 50 percent, providing college access to millions of additional students across the country. 

 

·         Helping Responsible Students Manage Student Loan Debt: The Administration’s “Pay as You Earn” plan expands income-based repayment to enable 1.6 million responsible students who are current on their payments to take advantage of a new option to cap repayment of student loans at 10% of monthly income.  These changes will reduce the burden of student loans in a fiscally responsible way.

·         Expanding Education Tax Credits: President Obama established the American Opportunity Tax Credit in 2009 to assist families with the costs of college, providing up to $10,000 for four years of college, university, or community college tuition for families earning up to $180,000. Over 9.4 million students and families benefit from the American Opportunity Tax Credit each year.  President Obama has called on Congress to make this tax credit permanent and prevent it from expiring in 2012.