With the presidential election creeping closer and closer, it’s important that students know how the candidate’s policies will affect them. While Obama and Romney agree on a few education points, there are some key differences consumers should take note of. Here’s a quick overview of the major differences:
|President Obama is for…||Presidential Candidate Romney is for…|
|Maintaining the current Department of Education||Cuts to the Federal Department of Education|
|Keeping student aid federally funded||Privatization of the student loan program|
|Regulating for-profit institutions to ensure quality programs for students||Encouraging growth at for-profit institutions to help spur market competition|
|Lowering tuition costs||Lowering tuition costs|
|Improving consumer knowledge on college costs||Improving consumer knowledge on college costs|
One point of agreement between the candidates is the importance of keeping student loan costs low for families. Both parties were in favor of the 3.4% interest rate extension that was enacted back in July 2012.
Obama – President Obama ended the Family Friendly Education Loan Program (FFELP) and in its place created the Federal Direct Loan Program. This shifted the student loan program from the private sector to federal as part of the Health Care and Education Reconciliation Act of 2010 (HCERA).
Romney – Candidate Romney is in favor of reversing the “nationalization of the student loan market”, bringing competition back through private lender participation. While it is unclear whether FFELP would be reinstated, he does propose an end to the Direct Lending Program created under Obama’s Administration.
Pell Grants and Federal Student Aid Funding
Obama – Under the current Obama Administration, the maximum amount students can receive in the form of a Pell Grant was increased from $4,731 to $5,500 per year. Pell grant spending has more than doubled from ’07-’08 to ’10-’11, though only about 25 percent of this is directly related to the increase in award amount. As part of HCERA, the Obama Administration “ended student loan subsidies for private financial institutions and banks and shifted over $60 billion ? back to students.”
Romney – Presidential Candidate Mitt Romney plans to retarget Pell Grants to students who need them most, citing increased Pell spending as a driving factor for college tuition increases. His education plan states that “a flood of federal dollars is driving up tuition and burdening too many young Americans with substantial debt and too few opportunities.” Romney is in favor of simplifying the federal student aid program, including putting an end to the Direct Loan program in order to allow more competition by further involving private lenders and banks.
Tuition Inflation and Consumer Information
Once again, the candidates agree that tuition inflation is a problem. Both propose measures to help drive costs down, making college more affordable for families. Additionally, both propose rewards for institutions who effectively lower the cost of tuition, and penalties for those institutions who increase college costs.
Obama – Created the Financial Awareness Counseling Tool (FACT) to help students and families make better decisions about paying for college.
Romney – Wants to expand private sector involvement to “ensure that students are clearly informed about their obligations when they apply for federal student loans.”
The views of the two candidates greatly differ when it comes to for-profit institutions. While President Obama has enacted guidelines to measure for-profit return on investments for students, Romney maintains that healthy competition in the for-profit space will help drive college costs down.
Obama – During his presidency, Obama passed the Gainful Employment Act. This act required career college programs to better equip students with skills leading to “gainful employment”. For-profit institutions (as well as public and private schools offering certificate programs) must meet certain metrics in order to remain eligible for federal aid. These regulations are intended to help students gain the required skills for entering the job market, holding the schools accountable for the quality of the programs.
Romney – Republican Candidate Romney supports for-profit institutions, arguing that for-profits help keep college costs low by forcing schools to compete.
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