Obama Making College More Affordable

obama.college.costsPresident Obama unveiled a plan today that is aimed to make college costs more affordable.  The plan, he says, will rate colleges on the value they provide for the money students spend, and then tie those ratings to Federal student aid.  The plan would also include provisions allowing those paying off student loan debt to limit their payments to 10 percent of their monthly income.

The average annual cost of in-state tuition and fees for 2013 at four-year public universities was $8,655, up 4.8 percent from 2012, according to a survey from the College Board released this month.

I like the sound of it, giving colleges incentives to keep their costs in check.  But there is something about the government telling students where to go to school if they want student aid that just bothers me.  Once a system like this is in place, the government could place all sorts of requirements on colleges if they want student aid coming their way. With the cost of college education rising rapidly, this seems like a back door way for the Federal governement to control more of our Universities.

Here’s an idea for making college more affordable…how about charging a more reasonable interest rate on Federal student loans.  Americans now owe more than $1.2 Trillion in student loan debt.  Currently most student loans are accruing interest at about 6.8%.  Sallie Mae, a Federal agency and major provider of student loans, offers fixed rate loans with interest rates ranging from 6.41% – 11.69%.  With our banks being able to borrow Federal Funds at a rate of 0.25%, a 10 year Treasury bond paying 3.11%, and 30 year fixed mortgages still at around 4%, don’t you think we could do a little better than charging broke college grads between 6 – 11% interest?  Now I realize that these kids are coming out of college with no guarantee of a job or income, but it still feels like we’re taking advantage of these kids.

Maybe this will be a good thing for people seeking college educations.  But it sure seems like its going to put those schools who don’t agree to “toe the line” at a huge disadvantage.

5 Responses

  1. Kathy Kenison

    I agree with your analysis of this problem. Interest on the loans are far too high. I also think it would be more advantageous to punish those who default on their loans. (I hear that there are a lot of dead beats out there.) I don’t think the government should rate or rank universities. The government is not a good example of how to efficiently and effectively use funds. What makes them think they can supervise the universities to do better than they do? All we need is the “$600 toilet seat” mentality to be spread further into the universities.

    • Exactly! For the Federal government to tell anyone how to provide maximum services for minimum costs is hilarious! They’ll have our best universities losing money in no time.

  2. W Jeffrey Stikeleather

    This does not specifically address the “online” colleges which I understand are natorious for bilking the student and the government for cost. While the online schools sound and should be considerably cheaper than brick and morter schools (B&MS), the reports I hear is they are making proportionally more than the B&MS???

    • You’re right Jeff. The last time I checked into the cost of tuition at some of these “online” colleges I was quite surprised that it was about the same if not more than attending a brick & mortar school. Maybe we should start one up ourselves!

  3. Vernon Redfern

    This is just another example of the obama administrations ridiculous ideas. I agree with Mark. The federal government could do a lot better to help young people fund their education. The president needs to rethink the priorities of government spending. I think that education should be a major priority. These young people, after all, will become the future leaders in business and government. Why not help them get the best education possible…at a reasonable cost.

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