Obama Vs. Romney on Student Loans
Over 37 million people in America carry student debt—and a large percentage of students must take out loans in order to go to college. The total student debt load in the US exceeds $1 trillion. With the average debt load for students under 30 at $21,000—a number that’s doubled since 2005—and default rates up to 13.7%--there’s no question the US is facing a crisis in this area. And Presidential policy in the coming years could either alleviate it—or make it worse. Here’s a rundown on both Romney and Obama’s positions and records regarding student loans and funding for higher education.
Romney’s Record on Student Debt
Romney’s record as Governor of Massachusetts was mixed. He pushed through the John and Abigail Adams Scholarship program, offering four years of free tuition at Massachusetts state schools for high school students placing within the top quarter of their school district on standardized tests. He also tried to privatize the public university system as a cost-saving measure and increase tuition by as much as 28%--along with increasing financial aid programs by $44 million. He was
ultimately not successful in getting these measures approved by
However, some of Mitt Romney’s public statements on student loans haven’t exactly been encouraging.
During a stop in Manchester, New Hampshire, on the campaign trail a college student asked him what steps he would take as President to alleviate the student debt crisis. Romney’s response was, “It is very tempting as a politician to say, ‘You know what, I will just give you some money. The government is just going to give you some money and pay back your loans for you.’”
That said, Romney claims his positions are designed to make it easier for students to get jobs—and lessen the tax burden, so students will have an easier time paying back loans. “I’m not going to promise all sorts of free stuff that I know you’re going to end up paying for,” he went on to say. “What I want to do is give you a great job so you’ll be able to pay it back yourself. And I want to get the government off your back, so you can keep more of what you earned.”
Romney, and his running mate, Paul Ryan, have also indicated they would prioritize addressing rising tuition costs. One of the ways Romney proposes to do this is by encouraging the growth of accredited online colleges, in the belief that administering classes online will be cheaper and more efficient—ultimately reducing tuition for students.
In addition, in his more comprehensive statement on education, “A Chance for Every Child,” Romney expresses skepticism about the importance of four-year degrees—claiming two-year degrees, certificates, and apprenticeships may be more useful for many positions—which would dramatically lower costs for many students.
However, Romney and Ryan have not been supportive of measures that could actually help students who are currently struggling with student debt. Paul Ryan has proposed measures that would reduce Pell Grant access for over a million low-income students.
In Romney’s “A Chance for Every Child” position statement, he stated that his government would support colleges that are taking concrete steps to reduce tuition—something President Obama supports as well. His statements for the future of Pell Grant funding and other federal financial aid are vague, claiming a desire to “simplify” federal financial aid and “refocus” Pell Grants toward students who need it most. However, he does express a reluctance to increase Pell Grant funding specifically—and opposes gainful employment measures supported by President Obama that are targeted toward protecting students from paying a premium for degrees that hold little value in the marketplace.
A Chance for Every Child also expresses Romney’s reluctance to continue President Obama’s Pay As You Earn initiative to cap student loan payments at 10% of income and the Public Service Loan Forgiveness program that forgives loans for teachers, public defenders, and others who go into public service. It also criticizes President Obama’s decision to repeal the FFEL loan program, in which the federal government subsidized private banks in making education loans to students under government programs.
Romney’s actions as President are difficult to predict. However, his prior statements show a reluctance to use government funds to provide assistance to students in paying for college—and a preference for partnerships with private entities. This could result in a reduction of federal aid over the long term—and higher costs for students down the road.
President Obama on Student Debt
Income-Based Repayment. This plan puts a cap on required student loan repayments at 10% of the borrower’s monthly discretionary income. Under this plan, students also get up to $45,520 of their loans forgiven after ten years or 120 payments. Even better, if you qualify for deferment, the months you don’t pay under that agreement count as payments toward forgiveness.
Expanded Pell grant funding and eligibility. Under the Obama administration, Pell grant funding was set to increase a bit faster than inflation—making it no longer subject to discretionary budget reviews. The requirements for qualifications were loosened so that more qualified—and the amount you could qualify for under the program increased.
Expanded Perkins loans. Perkins loans have the lowest interest rate available for federal loans, and they’re subsidized—meaning they don’t accumulate interest until the borrower graduates. President Obama increased Perkins loans funding and expanded eligibility requirements there, too—and boosted participating colleges from 1,800 to over 4,4000.
However, President Obama has had to compromise some of his policies based on
economic and political events, particularly the debt deal of 2011. Some of the concessions he has had to make include limits to some of his expansions to the Pell grant program, an elimination of subsidized Stafford loans, and elimination of subsidized student loans for graduate and professional students.
Which candidate is better for student loans? It’s hard to say—but which is better for you depends on your political philosophy. Mitt Romney has expressed a distinct lack of enthusiasm for government-run student aid programs—but seeks to put pressure on schools to reduce tuition and partner with private industry to increase college access. Obama has demonstrated a strong commitment to federal funding programs—but has shown a willingness to make compromises that cost students money. Hopefully, no matter the outcome, measures will be enacted that truly will drive change in this area.
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