President Obama Lays Blueprint for Keeping College Affordable
By Consumers Union on Monday, January 30th, 2012
President Obama stopped by the University of Michigan on Friday to announce a comprehensive plan to rein in the skyrocketing costs of going to college.
The plan includes key reforms to reduce the need for costly student loans. Relief from high student debt loads is clearly needed – student loan debt in the U.S. exceeded $1 trillion in 2011, according to reports from the Federal Reserve Bank of New York and the U.S. Department of Education.
The President’s plan includes the following important reforms:
o Keep student loan interest rates low: This summer, the interest rates on subsidized Stafford student loans are set to double from 3.4% to 6.8% – a significant burden at a time when the economy is still fragile and students are taking on increasing amounts of debt to earn a degree. The President is asking Congress to prevent that hike from taking place for a year to keep student debt down, a proposal that will keep interest rates low for 7.4 million student loan borrowers and save the average student over a thousand dollars.
o Double the number of work-study jobs available: The President also proposes to double the number of career-related work-study opportunities so that students are able to gain valuable work-related experience while in school.
o Maintain commitment to college affordability: Over 9 million students and families per year take advantage of the Obama Administration’s American Opportunity Tax Credit – supporting up to $10,000 over four years of college. In his [State of the Union address], the President called on Congress to make this tax credit permanent and prevent it from expiring in 2012.
The President’s plan would also require updated financial education tools and a system for collecting data on post-graduation earnings and employment rates, among other things. These tools could go a long way to help students find schools that are both affordable and suitable for their needs.
To learn more about the President’s plan, click here.
To see Consumers Union’s tips for graduating with less student debt, click here.