Higher education rarely takes center stage on the national agenda, and the current political environment, dominated by proposals to stimulate the economy and reform health care, is no exception. However, among the many programs and initiatives President Obama highlighted during the State of the Union address on Wednesday were two higher education programs that would prove very important to Minnesota students as they weigh the increasing cost of higher education alongside the high unemployment rate.
First, President Obama urged the Senate to pass a student loan reform bill that would direct billions of dollars to Pell Grants and community colleges, generally making higher education a more affordable option. He also called for an expansion of the government’s newly created Income-Based (student loan) Repayment Program to make the burden of student debt a little lighter following graduation.
The legislation would end the Federal Family Education Loan Program and shift all student loans into the direct loan program. According to the Congressional Budget Office, the plan would generate an estimated $87 billion in savings over 10 years, which would be redirected to increase grants, a new community college initiative and other programs. The House of Representatives passed its version of the bill in September and President Obama urged the Senate to follow their lead.
The Income-Based Repayment Program, created by Congress in 2007, allows borrowers with federally subsidized loans to make reduced payments on their loans that total no more than 15 percent of their discretionary income. President Obama’s proposal would cut the maximum payment to 10 percent of a borrower’s discretionary income, and would allow those loans to be fully forgiven after 20 years of payments rather than the current 25 years. The program aims to increase government support for college students who take low-paying jobs after they graduate. The President also indicated that there would be even more extensive loan forgiveness for individuals who enter public service careers.
These proposals are definitely helpful tools for students in Minnesota (and around the country) as they try to find ways to find ways to finance their education without being hindered by overwhelming debt after graduation. I know I’m repeating myself, but I can’t say it often enough: making college more affordable is vital to creating a skilled workforce that will keep Minnesota competitive in the years ahead, and these programs definitely take a necessary step in the right direction.