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November 17, 2008

What Will Barack Do For You, College Student?

Almost all of the Vermont college kids voted for Barack Obama, but how many of them actually know what his plan is for higher education, and how it will affect them?

One thing Obama stresses is that he would like higher education to be more accessible, and so, he proposed a fully refundable tax credit to cover the first $4,000 in college tuition costs. Not just any tax credit, this is the American Opportunity Tax Credit. According to Obama, "This universal and fully refundable credit will ensure that the first $4,000 of a college education is completely free for most Americans, and will cover two-thirds the cost of tuition at the average public college or university and make community college tuition completely free for most students." The only requirement for the money would be 100 hours of public service per year.

Yes, that's nice and all but let's be honest, it's a small drop in a big bucket. The real issue is the outrageous cost of college, something I'm not sure Obama's plan reduces. It's not $4k each semester, this is a one-time-thing.

In large part, college costs are increasing because there are more people entering the system each year. My guess would be that colleges will just increase tuition by a few thousand dollars to recoup any losses that may come from the tax credit Obama touts. The other arm of his credit, community service, is also a swell civic initiative, but perhaps specialized training programs or vocational workshops would be a better use of the individual's time and potential. There is also more money available for colleges in the form of personal loans, federal loans, and state loans, which drive costs upward as well. Parents and students alike continue to line the ivory towered pockets though with the credit meltdown, it's hard to know what will happen next. Who is going to stop the universities from simply increasing their prices?

One of the other critical points to Obama's higher education makeover is the potential ending of the Federal Family Education Loan Program (FFLEP). Subsidies will be eliminated, effectively forcing much of the student loan industry into the Direct Loan program. We can all agree that the private lenders have not served the interests of the citizens (See Mae, Sallie) but let's consider government's historical ineptitude at governing much of anything effectively. Take it all with a grain of salt.

By slashing the FFLEP program, Obama increases the size and scope of the Federal Pell Grant program. The Pell Grant program is nice in theory and for some, is a real tool for mobility, but it doesn't necessarily make education much cheaper or more accessible, not to the point where this still will not be a formidable issue for many Americans. Obama doesn't specify how he will boost the maximum Pell Grant but some have suggested that it will adjust with the inflation rate. If this plan is enacted, any institution that accepts Federal Pell Grants or federally guaranteed loans should have all their finances made public. There needs to be some semblance of accountability.

All told, Obama's plan can save students an average of $4,000. Considering the total cost of college, more must be done.

Obama's plan would eliminate the Free Application for Federal Student Aid, which he says is too "cumbersome" and "complicated." Students and their parents would simply check a box on their income tax returns to apply for aid. Agreed, the FASFA is a pain, but that's the best he can do? Really? This doesn't sound like real change to me, it sounds like a small Band-aid on a large wound.

Maybe we could take a look at other countries' higher education policies and amend things based on what works for them. I find it hard to believe that McGill, an excellent school right above the border, can figure out how to keep costs low for students while still providing a quality education, but we in the U.S. cannot.

I can't see how Barack Obama's plan has actually made any effort to implement significant change to a very serious issue. All those on Church Street who screamed and voted for Obama should have the same resolve to ensuring that this gets figured out.

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Comments

collegeloanconsultant

It would be more useful if he dropped federal interest rates so that at least when students graduated, their debt was manageable. Unless he was willing to prohibit federal money from going to schools which do not control their tuition rates, any action he takes to help students will also encourage colleges to increase tuition costs.

federal interest rates

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