October 30, 2008

Presidential Candidate’s Higher Education Plans

Posted in Parent PLUS Loans, Saving for College, Stafford Loans, Student Loan News, The Financial Aid Process at 2:16 PM by Joe From Boston

With the election only days away, here is a very interesting article from the New York Times outlining both Obama and McCain’s plans for higher education.

Here’s an excerpt:

He is calling for a $4,000 tax credit for tuition, which would mostly benefit middle-class families rather than low-income students who struggle the most with tuition increases and loan repayment. Recipients of the tax credit would have to perform 100 hours of community service. And it is not clear if Congress, in the current economy, would have the desire to enact the tuition tax credit, which would cost the Treasury an estimated $10 billion.

“Whoever wins will not have any money to do anything new,” said Thomas G. Mortenson, a longtime independent analyst of student financial aid programs.

As president, Mr. McCain would take a bully pulpit approach to student aid, aides say. Rather than propose any new federal money, he would jawbone and publicly try to coax colleges to slow their rate of tuition increases, using the federal tax exemptions they receive as leverage. He also would press for a more robust student loan market, with flexible payment options and more competition in the hope of lowering interest rates.

Mr. McCain is also calling for the Pell Grant, which assists low-income students, to be high enough to cover in-state undergraduate tuition. The maximum Pell Grant award is $4,731 a year; average in-state tuition and required fees in 2007-8 was $5,749.

Mr. McCain, however, has not proposed any new money for the Pell program; Mr. Obama has proposed an additional $1.5 billion in Pell Grants. The program now receives about $16 billion a year.

“I have a feeling that for both candidates, their proposals will be a work in progress, and the best road ahead won’t be clear until the dust settles on the credit market situation,” said Becky Timmons, who helps oversee federal student aid issues at the American Council on Education, an umbrella group of colleges. “Given the economic situation, we assume there will be a lot more demand for aid and loans.”


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