President Obama revealed a new college affordability plan Friday that would increase federal grant money available in low-interest loans.
The proposal would boost federal investment in the Perkins loan program from $1 billion to $8 billion and refurbish the money distribution system. A Race to the Top will be established to reward states who are willing to change their policies and practices in higher education, while containing their tuition rates.
According to The Washington Post, while speaking to students at the University of Michigan, Obama said, You can't assume you'll just jack up tuition every single year. If you can't stop tuition going up, your funding from taxpayers will go down. We should push colleges to do better; we should hold them accountable if they don't.
About $55 million will be invested in a new First in the World competition to support public and private colleges as well as non-profit organizations that increase higher education attainment and student outcomes.
The president wants a College Scoreboard created for all degree-granting institutions in order to provide more information about costs, graduation rates and potential earnings for potential students and parents. The hope is that this system will aid families in choosing a college that is well suited for their needs and budget.
In the State of the Union Address, Obama called on Congress to keep interest rates low for student loan borrowers, make the American Opportunity Tax Credit permanent and double the number of available work-study jobs over the next five years. He also wants Congress to retract a proposed doubling of the current 3.4-percent interest rate on federal subsidized Stafford loans that will be in effect this summer.
However, most of the plan will require congressional approval. White House officials told The Washington Post that the Perkins loan portion of the President's plan would not cost taxpayers more because students pay off the aid money with interest.
Obama's appearance at the University of Michigan was his final stop of a three-day tour that aimed to build support for the higher education goals in battleground states. The other stops included Cedar Points, Iowa, Pheonix, Las Vegas and Denver. The plan to control college costs promises to be an important initiative in the Democrats' 2012 campaign, reaching out to the middle class.