President 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.