Students’ College Access to Improve, Vice President Pledges
Vice President Joe Biden intends to make higher education a reality
for more young people, the Associated Press reports, in part by
closing the gap between families’ incomes and rising college costs
(“Biden Wants to Make Higher Ed More Affordable,” USA Today, April
18, 2009).
At a town hall–style meeting he hosted in St. Louis Biden told about
300 people that he’ll be asking the Treasury Department to figure
out how to make college savings plans more effective and more
reliable.
“We’re going to make a series of investments, investments in our
families and our students,” he said, highlighting the
administration’s efforts to improve tax breaks for families and
increase need-based grants for low-and middle-income families.
White House Taps Existing Programs to Increase College Affordability
Since so many families save for college using tax-deferred 529
savings plans, which allow families to set aside funds to cover
future tuition expenses, fees, books, and supplies, the Obama
administration is examining a program that would allow families to
take out low-interest loans against their 529 plans to help them
cover college costs.
Obama has already increased funding for the need-based federal Pell
Grant program, which helps low-income students afford school, but
Biden said the Obama administration also wants to ensure continued
Pell Grant funding by setting up the program to be automatically
subsidized each year.
The government is also considering extending The American
Opportunity Tax Credit beyond 2010, which allows families to claim a
$2,500 tax credit for college expenses for up to four years.
But by far the most sweeping proposal from the Obama administration,
which has drawn fierce criticism from leaders in the student loan
industry, is the suggested cancelation of the federally funded
student loan program.
Lenders say that cancelling the program will eliminate families’
option to choose from a variety of private lenders and federal
student loan incentives and, instead, require them to borrow federal
student loans through government’s Direct Loan Program.
Biden alleges that the move to cancel the federal student loan
program would result in up to $94 billion in savings to the federal
government over the next 10 years, which he said, “We can take … and
reinvest … in more loans, more grants and more access to college.”