Biden, in a swing state, addresses student anxiety over college costs (+video)
Reforming student loans. By making all federal loans directly and eliminating subsidies for banks that had been acting as middlemen, the US government will save $60 billion over 10 years, the Obama administration estimates. Its plan is to invest most of that into federal Pell Grants.
Boosting Pell Grants. The maximum grant now for low- to middle-income students is $5,500 a year, up from $4,731 in 2008.
Tax credits. Through the American Opportunity Tax Credit, 9.4 million families in 2011 received as much as $2,500 for tuition, fees, and textbook expenses.
Loan repayment improvements. Graduates who are eligible can cap their monthly repayment bills at 10 to 15 percent of their discretionary income and have the remainder of their loans forgiven after 20 years of payments. Public service workers can have loans forgiven after 10 years.
President Obama, Biden, and Secretary of Education Arne Duncan have also been meeting with college presidents, financial aid professionals, and even college athletics leaders to urge them to do more to cut costs.
“I want to ask you, and the entire higher education community, to look ahead and start thinking more creatively – and with much greater urgency – about how to contain the spiraling costs of college and reduce the burden of student debt on our nation’s students,” Secretary Duncan said at a conference of federal student aid officials in November.
The administration hopes to have such conversations, as well, with governors and state legislators, who have a major role in overseeing state budgets and public universities, says a Department of Education spokesman.
For their part, institutions of higher education “have taken an increasing proportion of their tuition revenue and repurposed it for financial aid ... [and they are] stepping into the breach here in ways that are smart, that are novel, and that are improving productivity,” says Molly Corbett Broad, president of the American Council on Education in Washington.