The candidates’ plans for college and higher education are disappointing to say the least!
I mentioned earlier that rapidly rising tuition costs can be attributed at least partially to the current federal subsidy & manipulation of student loans through the Higher Education Act. As long as subsidized loans out-perform market averages in other secure investment vehicles, lenders have to keep the rates on private loans also above-market. As usual, subsidies tend to create price floors. Why would a bank settle for “normal” market returns if the government guarantees better profits?
Senators and presidential candidates Obama, Hillary, and McCain don’t have very much to say about higher education and college tuition costs. In fact, McCain doesn’t have anything to say about college at all and his “Issues” page on education focuses on accountability and expanding the No Child Left Behind program – with even harsher penalties for failing schools.
Obama and Hillary offer almost the exact same plan. Essentially, a tax cut for anyone paying for tuition. Hillary Clinton’s plan calls for a $3,500 tax credit, and Barack Obama’s plan calls for a $4,000 tax credit. From Obama’s website:
This universal and fully refundable credit will ensure that the first $4,000 of a college education is completely free for most Americans, and will cover two-thirds the cost of tuition at the average public college or university and make community college tuition completely free for most students.
The other promise they make is to “simplify” and “streamline” the federal financial aid process (FAFSA). This isn’t really news, because this has already been written into the College Opportunity and Affordability Act. If the law passes as written, IRS information can be used to “pre-populate” FAFSA forms, allowing students and parents to apply for financial aid at the same time they pay taxes.