![]() ![]() President Obama’s plan will connect student aid to outcomes, which will in turn drive a better, more affordable education for all students: Almost all of these resources are allocated among colleges based on the number of students who enroll, not the number who earn degrees or what they learn. The federal government provides over $150 billion each year in student financial aid, while states collectively invest over $70 billion in public colleges and universities. Pay Colleges and Students for Performance Reach out to struggling borrowers to ensure that they are aware of the flexible options available to help them to repay their debt. ![]() Help ensure borrowers can afford their federal student loan debt by allowing all borrowers to cap their payments at 10 percent of their monthly income. Give consumers clear, transparent information on college performance to help them make the decisions that work best for them.Įncourage innovation by stripping away unnecessary regulations.Įnsuring that Student Debt Remains Affordable Hold students and colleges receiving student aid responsible for making progress toward a degree.Ĭhallenge colleges to offer students a greater range of affordable, high-quality options than they do today. Tie financial aid to college performance, starting with publishing new college ratings before the 2015 school year.Ĭhallenge states to fund public colleges based on performance. And to help student borrowers struggling with their existing debt, the President is committed to ensuring that all borrowers who need it can have access to the Pay As You Earn plan that caps loan payments at 10 percent of income and is directing the Department of Education to ramp up its efforts to reach out to students struggling with their loans to make sure they know and understand all their repayment options.Ī Better Bargain for the Middle Class: Making College More Affordable The President’s plan will also take down barriers that stand in the way of competition and innovation, particularly in the use of new technology, and shine a light on the most cutting-edge college practices for providing high value at low costs. And after this ratings system is well established, Congress can tie federal student aid to college performance so that students maximize their federal aid at institutions providing the best value. His plan will measure college performance through a new ratings system so students and families have the information to select schools that provide the best value. Today, President Obama outlined an ambitious new agenda to combat rising college costs and make college affordable for American families. Loan default rates are rising, and too many young adults are burdened with debt as they seek to start a family, buy a home, launch a business, or save for retirement. Only 58 percent of full-time students who began college in 2004 earned a four-year degree within six years. While a college education remains a worthwhile investment overall, the average borrower now graduates with over $26,000 in debt. Declining state funding has forced students to shoulder a bigger proportion of college costs tuition has almost doubled as a share of public college revenues over the past 25 years from 25 percent to 47 percent. The average tuition at a public four-year college has increased by more than 250 percent over the past three decades, while incomes for typical families grew by only 16 percent, according to College Board and Census data. However, despite these measures, college tuition keeps rising. ![]() That’s why since taking office, President Obama has made historic investments in college affordability, increasing the maximum Pell Grant award for working and middle class families by more than $900, creating the American Opportunity Tax Credit, and enacting effective student loan reforms eliminating bank subsidies and making college more affordable. At the same time, it has never been more expensive. A higher education is the single most important investment students can make in their own futures. ![]()
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