Obama’s New Financial Aid Plan: Much Ado About Nothing?

Inside Higher Ed made a few great suggestions culled from the administration’s failures and successes; I hope someone in the administration heeds. It’s hard to see how this plan would generate change and make college more affordable.  While there are some good measures here, I don’t see enough carrots or sticks.

If schools follow the rules and are able to admit more students who are Pell Grant eligible, and from working-class homes, what do they get? If they aren’t able to do it, what do they lose? Clearly, there will be some correlation to the aid they receive, but how exactly will that aid be denied and what appeal rights do the institutions have? The details aren’t exactly there yet, and it’s hard not to be cynical and think that over time—and possibly behind closed doors—the stick won’t get less painful and the carrots bigger, sweeter, and impossible to miss.

This plan will affect all schools—public, private and even for-profit. Mollifying the various concerns universities have will be a necessity, especially considering the political clout of institutions. Congress knows that all too well. Last summer, the Obama administration announced a “gainful employment” rule, which would require for-profit colleges to take specific measures that ensure their graduates can obtain jobs that are capable of paying off their student loans. One would think such a rule would be common sense and already in existence. But on Capitol Hill it was met with pure skepticism.

Congress should have embraced the rule because it already was supported by its own conclusions. Sen. Tom Harkin (D-IA) headed a three-year study of student loan delinquency and  found “[n]early half of all federal student loan defaults occur at for-profit schools” yet for- profits only account for 10% of the nation’s students. That rate is abysmal and all parties, including the federal government, should take responsibility for it. Instead, Congress watered down the gainful employment rule and when that wasn’t enough the Association of Private Sector Colleges and Universities, the for-profit school trade group, sued in federal court.

If just a portion of the higher education realm could stop this commonsense rule dead, imagine what the larger post-secondary world banding together can do?

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