In today’s Times, my colleague Tamar Lewin has a preview of an address that President Obama is expected to deliver at the University of Michigan on Friday morning in which he will call for an overhaul of crucial aspects of the federal financial aid system.
Specifically, the president will ask Congress to link the colleges’ eligibility for campus-based aid “to the institutions’ success in improving affordability and value for students,” Ms. Lewin writes. The proposal, which would require Congressional approval, would apply to Perkins loans, work-study jobs and supplemental grants for low-income students. The amount available for Perkins loans, Ms. Lewin writes, would grow by a factor of 8, to $8 billion, from the current $1 billion.
That increase could have a substantial impact on some students and families. Another proposal by the president is intended to make it easier for families to take the measure of the cost of various institutions. Ms. Lewin writes that the administration will seek to require colleges and universities “to offer a ‘shopping sheet’ that makes it easier to compare financial aid packages and — for the first time — compiling postgraduate earning and employment information to give students a better sense of what awaits them.”
As the president’s proposal begins to take shape, we’d like to begin a conversation on The Choice about it, and the larger issue of the cost of college and the spiraling rise in student loan debt. Please post your comments using the box below.
Meanwhile, what is a Perkins loan? Ms. Lewin provides this primer:
While Pell grants and Stafford loans are larger programs than the ones the administration wants to change, they are federally administered and can be used by students at any college. In contrast, the campus-based programs the administration is proposing to change are administered by individual schools, whose financial aid offices have substantial discretion. About 1,700 colleges and universities now offer Perkins loans, a number that would increase to more than 4,000 in the new proposal.
And how might the program change under the president’s proposal?
The officials said the current financial aid system rewards colleges for longevity in the program, and provides perverse incentives for keeping college costs high. Under their new proposal, they said, colleges would instead be rewarded for lower net tuition prices; restrained tuition growth; enrolling and graduating low-income students; and providing education and training that help graduates get jobs and repay their loans.