The funding for higher education takes a front seat in the concerns of many college students as they decide whom to vote for this November.
Mitt Romney and Barack Obama both vary on their stances and plans for reducing student debt. Obama is more in favor of increasing the availability of financial aid for students.
Romney and his running mate Paul Ryan are more focused on limiting the amount of federal spending and instead concentrate on curbing the rise of tuition rates. Both Romney and Obama were in favor of extending the 3.4 percent interest rate on direct student loans.
“[Obama] eliminated subsidies to the FFELP (Federal Family Education Loan Program) and by doing so, created more reliance on Federal Direct loans,” said Drew Janego, president of the NMU college democrats. “[The FFELP] was subsidized by the Department of Education and went through private lenders to students.
“He (Obama) was trying to reduce unfair interest rates from unfair lenders.”
The Health Care and Education Reconciliation Act of 2010, commonly known as Obamacare, ended the process of providing subsidies to private lenders who serviced federal student loans and those loans were taken over by the Department of Education. However, the Republican stance is that the federal government should not be originating student loans.
“[Those funds] have to come out of the taxpayers pocket,” said Luke Londo, treasurer for the College Republicans. “As long as the government owns the debt, they would prefer to keep it at the current rate (3.4 percent).
“[Republicans] would prefer for the banks to take over but not going to do that because logistically, they’re going to pitch it, the private-sector banks are going to buy it cents on the dollar, and the government will refuse to take such a massive loss. They’re just getting stuck with useless debt.”
The Health Care and Education Reconciliation Act added $40 billion to Pell Grants. The grant is provided to students of low-income families who are pursuing their first bachelor’s degree.
According to Janego, steady rises in the Pell Grant will bring the maximum award to $5,975 by 2017, up from the current $5,550.
“[Obama] has significantly expanded Pell Grants with his plan adding $68 billion over 11 years (starting with the Health Care and Education Reconciliation Act of 2010),” Janego said. “He pledged to provide 820,000 more grants by 2020. Additionally, he invested $2 billion to community colleges to make it more accessible for folks going that route.”
The American Opportunity Tax Credit was created in 2009, and was extended to apply for tax years 2011 and 2012.
According to the Internal Revenue Service, parents and students with an individual salary of $80,000 will qualify for the credit, which offers a maximum annual credit of $2,500 a student. The tax credit can be claimed for four years of college.
“[Obama’s] goal is to make tuition more affordable and his solution is expanding the Pell Grant and lowering the cap on loan repayment to 10 percent of income,” Janego said.
Republicans hold the stance that loans should be serviced by the private sector rather than the federal government. By shifting the responsibility to the federal government, the burden of student debt is shifted as well.
“A lot of people are looking at (over $1 billion in student loan debt) as the new financial bubble they’re going to experience as soon as next year or it could be many years down the line,” Londo said. “See the way the government behaves with GM as they bought shares and the government refuses to sell them. [The U.S.] possesses all that debt and they want to recoup their losses.
“The country is just getting stuck with useless debt and they’ll either make some money back or they’ll be willing to settle for pennies on the dollar to get rid of [student loans].”
Republicans in general opposed the creation of Obamacare.
“Republicans’ alternatives to keeping the (student loan interest) rate at 3.4 percent would be to pull funding from the Obamacare slush fund,” Londo said. “The past few years, the federal government has gotten involved in arenas not too commonly involved, such as this drought where farmers their insurance through the government.
“The government is paying a huge amount of money and these are very costly programs that the government has decided to inject themselves into, which they were traditionally never a function of it.”