Obama Proposes Financial Aid Reform
Published: Tuesday, August 27, 2013
Updated: Tuesday, August 27, 2013 02:08
In order to increase college affordability, President Barack Obama announced a proposal to reform the allocation of federal financial aid Aug. 22.
Obama’s proposal calls for student aid to be based on the value of a college education as determined by a new ranking system.
The new college-ranking system, which aims to help the middle class, would compare a college’s cost to its value. The system uses access, affordability and outcomes to score a university. Specific factors under consideration would include tuition, scholarships, loan debt, grant availability, graduation and transfer rates, graduate earnings and careers.
Under the proposal, students who attend high-performing colleges — or those designated a high value — would receive larger Pell Grants and more affordable student loans.
In order to increase the amount of financial aid they receive, colleges would actively pursue innovative methods to maintain or increase the quality of the education they provide. For example, Obama has previously cited the successes of online education and high school partnerships, which allow students to obtain college credits and graduate from college early.
“When it comes to the ‘value’ side of the equation, I am confident that Georgetown will stack up quite well,” Associate Vice President for Federal Relations Scott Fleming wrote in an email.
Fleming cited the low default rate on student loans for Georgetown alumni.
“The default rate calculated by the Department of Education for Georgetown alums is very low, an indicator that graduates are working and able to repay their student loans,” Fleming wrote.
Obama’s proposal attempts to alleviate education-related debt. Previously, Obama’s Pay-As-You-Earn plan capped loan repayments at 10 percent of a student’s post-college income. Under the new proposal, Pay-As-You-Earn requirements would be expanded to allow more students to participate.
“Higher education is still the best ticket to upward mobility in America, and if we don’t do something about keeping it within reach, it will create problems for economic mobility for generations to come. And that's not acceptable,” Obama said in a speech at the State University of New York at Buffalo on Aug. 22. “Today, I’m proposing major new reforms that will shake up the current system, create better incentives for colleges to do more with less and deliver better value for students and their families.”