This is a couple of weeks old, but I just happened to see it today. Apparently, Paul Ryan (R-WI), thinks that instead of receiving Pell Grants, students should rely on even more student loans and then work three jobs to pay them back. Here is Ryan’s exchange with student Matthew Lowe at a town hall meeting in Muskego, WI:
LOWE: I come from a very middle-class family and under President Obama, I get $5,500 per year to pay for school, which doesn’t come close to covering all of the funding, but it helps ease the burden. Under your plan, you cut it by 15 percent. I was just curious why you would cut a grant that goes directly to the middle- and lower-class people that need it the most.
RYAN: ‘Cause Pell Grants have become unsustainable. It’s all borrowed money…Look, I worked three jobs to pay off my student loans after college. I didn’t get grants, I got loans, and we need to have a system of viable student loans to be able to do this. Read more…
The New York Times reports today that aggressive lobbying by top student lenders like Sallie Mae may derail Obama’s plans for reforming the student loan industry.
Obama’s plan is to cut out federal subsidies to private lenders and loan the money directly to students instead, a plan that a Congressional Budget Office analysis says could save approximately $80 billion dollars over the next ten years. That money would then go to “expanding direct Pell Grants to students, establishing $10,000 tax credits for families with loans, and forgiving debts eventually for students who go into public service, administration officials say.”
By the end of the night (hopefully), we’ll know whether our next president is going to be Barack Obama or John McCain. No matter who wins, the next President is going to face several challenges in making sure that college is affordable for everyone. The Higher Ed Watch blog lists the federal budget deficit, the continuing credit crunch, a budget shortfall in the Pell Grant program, and expiring student aid programs and benefits as major obstacles to each candidate’s plans for making college more affordable. One important program set to expire is the interest rate reduction for subsidized federal student loans.
The interest rate reduction that Congress approved for subsidized federal student loans is due to expire at the end of the 2011-12 academic year. In other words, under current law, loans issued that year will have a fixed interest rate of 3.4 percent for the life of the loan, but loans issued the following year will carry a fixed rate of 6.8 percent. The new president will have to decide whether he supports extending the 3.4 percent interest rate. Doing so could cost as much as $3 billion a year. Of course, allowing student loan interest rates to double could be politically risky, no matter the costs or public policy implications. [At Higher Ed Watch, we believe that policymakers should consider expanding the existing student loan interest rate reduction instead. That proposal would be less costly and better targeted on recent college graduates with burdensome levels of debt.]