Financial Aid Stakes High in November Election
The federal government’s approach to higher education funding, particularly student financial aid, could change significantly with November’s presidential election, potentially altering the way millions of students think about and pay for college.
While Harvard undergraduates, who benefit from Harvard’s own robust financial aid program, rely less on federal aid than students elsewhere and usually graduate with less debt, the University has a vested interest in national student aid policies nonetheless. Harvard spends hundreds of thousands of dollars annually to lobby Congress, the White House, and the Department of Education on a variety of issues, and education funding often figures prominently in those conversations. According to public filings made with the House of Representatives and the Senate, the University’s efforts touched on Pell Grants, Perkins loans, Stafford loans, and other student aid issues in the first two quarters of 2012, in which Harvard spent $350,000 on lobbying overall.
“We believe that a large reason why the United States has been a pillar—really the leader internationally without argument in higher education” is the robustness of its financial aid, said Harvard Vice President for Public Affairs and Communications Kevin Casey, the University’s chief lobbyist. “We worry about the erosion of some of those supports for students.”
“It’s very important, we think, as a principle, that there’s enough support for students where they can make individual decisions to seek the kind of education that they’re capable of achieving,” Casey added. “Therefore we think it’s important for all students to feel they can afford to go wherever they can go.”
November’s presidential election could determine the future finances of aid programs that make those choices possible.
ONE PROBLEM, TWO PLANS FOR AID
Democratic President Barack Obama and Republican presidential nominee Mitt Romney have laid out two vastly different plans for how federal grant and loan programs would work in their respective administrations.
Obama, who worked during his first term to expand grant funding and nationalize the student loan market, has pledged to keep interest rates low and to further expand Pell Grant eligibility and other federal tax credits for students. In his own plan, Romney has said he would restrict Pell Grants to those who most need them, re-privatize the college loan market, and rely on market forces moderate the rising cost of college education.
The urgency of the debate over higher education aid bespeaks the ballooning of the student debt crisis, which for decades has been escalating alongside rising tuition costs. The president elected in November will face the largest student debt crisis in the country’s history: nearly two-thirds of college students and recent graduates owe a combined $1 trillion to creditors.
The candidates’ respective approaches to the student debt crisis highlight their divergent views on the role of the federal government more broadly.
Obama would increase funding for the Pell Grant program, which offers direct aid to the lowest-income students in the nation, and would raise the maximum amount awarded to individuals through the program. One of the country’s most popular aid sources, Pell Grants currently go to more than 9 million students. The president would also make permanent the American Opportunity tax credit which his administration created in 2009 and which is set to expire in January.
During his first term, the President instituted a “Pay As You Earn” policy for federal loans, capping monthly payments to 15 percent of an individual’s discretionary income. If re-elected, Obama has said, he would work to institute a policy forgiving all federal student loan debt after 20 years.
Romney’s education proposals, while less precise, lay out a vision for a leaner federal aid system more influenced by market forces. His education plan released in April, titled “A Chance For Every Child,” calls for the federal government to end the “expanding entitlement mentality” that has arisen around direct aid programs like Pell Grants.
“A Romney Administration will refocus Pell Grant dollars on the students that need them most and place the program on a responsible long-term path that avoids future funding cliffs and last-minute funding patches,” the plan reads.