August 24, 2012
Under President Obama’s failed policies college prices have skyrocketed. While the president has tried to ignore the reality, the fact is that the cost of education (much like gas) has gone up on his watch. Many economists would argue that more federal education subsidies have caused a crisis in the cost of higher education. Another real crisis is that while students are forced to take more loans, there are fewer jobs available when they graduate.
- Rising College Costs Force Families to Eliminate Education Options: Rather than being able to send their children to the best available college, more than two-thirds of families have to narrow their college options because they can’t afford the rising costs on their shrinking budgets. According to the 2012 How America Pays for College study produced by Sallie Mae, the percentage of families who eliminated college choices because of cost rose to 69 percent, the highest level in the five years since the study began.
- Half of Recent College Graduates Are Jobless: More than 50 percent of recent college graduates are unemployed. About 1.5 million, or 53.6 percent, of bachelor's degree-holders under the age of 25 last year were jobless or underemployed.
- Graduates Struggling to Find Work: According to a recent AP report, thepresident’s disastrous economic policies have left one out of every two college graduates struggling to find work. Young adults with bachelor's degrees are increasingly scraping by in lower-wage jobs and that's confounding their hopes a degree would pay off despite higher tuition and mounting student loans. The report also states, “Taking underemployment into consideration, the job prospects for bachelor's degree holders fell last year to the lowest level in more than a decade.”
- Democrat’s Irresponsible Policies: Congressional Democrats irresponsibly increased Pell Grants with a patchwork of one-time stimulus funds and mandatory funding patches during a time when enrollment in the program was booming. In doing so, they expanded the program beyond sustainable levels, putting it on a path toward bankruptcy. Even the President’s budget acknowledges the problems facing Pell Grants, saying that “…action must be taken this year to keep the Pell Grant program on a sound footing…”
- President Obama’s Irresponsible Spending: The President has increased the maximum Pell Grant by more than $900 since 2008, to $5,635 for the 2013-2014 award year. However, his budget only provides funding for that level of award through the 2014-2015 academic year. This irresponsible spending serves only to put the program at greater risk of ultimately being unable to fulfill its promises to students.
In 2007, the College Cost Reduction and Access Act was signed into law. In 2006, as part of their “6 for ‘06” campaign agenda, Democrats promised to cut student loan interest rates in half. However, once gaining control of Congress in 2007, Democrats realized it was too costly to cut all student loan interest rates in half. Instead, Education & Labor Committee Chairman George Miller (D-CA) and then-Speaker of the House Nancy Pelosi (D-CA) proposed temporarily reducing interest rates for undergraduate students receiving subsidized Stafford loans. The College Cost Reduction and Access Act incrementally phased down interest rates for subsidized Stafford Loans made to undergraduate students over four academic years from 6.8 percent to 3.4 percent. Per the law, interest rates were scheduled to return to 6.8 percent on July 1, 2012.
As the expiration date crept closer, Democrats did nothing to address the impending interest rate increase during the 111th Congress, despite taking action to terminate the private sector federal loan program to help pay for the president’s government takeover of healthcare law. On April 27, 2012, the House approved H.R. 4628 by a bipartisan vote of 215-195, a bill that would prevent interest rates on new federally subsidized Stafford Loans made to undergraduate students from increasing from 3.4 percent to 6.8 percent on July 1, 2012. The bill would extend the 3.4 percent rate until July 1, 2013.
- The interest rate hike students face is the result of a ticking time bomb set off by a Democrat campaign promise. Now, in an effort to get through the election without making the tough decisions necessary, the president has proposed a one-year extension of the lower Stafford Loan interest rate.
- According to the Congressional Budget Office, a one-year delay in increasing student loan interest rates would cost roughly $6 billion. Neither President Obama nor his Democrat allies in Washington have proposed a responsible way to pay for the short-term fix.
- House Republicans want to promote efforts to reduce the costs of higher education, but the era of empty promises must end. House Republicans are exploring lasting solutions that help keep post-secondary education within reach for more students, including promoting enhanced transparency and encouraging states and institutions to look for ways to reduce costs and prevent tuition hikes.
- A number of federal initiatives are available to help student loan borrowers better manage their debt. House Republicans must continue to educate borrowers about available repayment options so they can make fiscally responsible decisions.
According to the Committee on Education and the Workforce, college costs have risen dramatically in the past decade. Since 2001, in-state tuition and fees at public four-year colleges and universities increased approximately 72 percent. As a result, more students than ever are taking out loans to help pay for college, and the student loan debt load has surpassed credit card debt.
In February, 2012, the House approved H.R. 2117, the Protecting Academic Freedom in Higher Education Act, a bill that would prevent federal intrusion in academic affairs, protect student choice in higher education, and reduce the regulatory burden on colleges by permanently repealing the unnecessary credit hour and state authorization regulations. The bill would do the following:
- Prevent unprecedented and unnecessary overreach into postsecondary academic affairs.
- Protect innovative methods for awarding credit by repealing the federal definition of a credit hour, and prohibits the Department of Education from defining “credit hour” in the future.
- Protect students and their institutions of higher education from increased costs by eliminating the unnecessary state authorization regulation.
For questions or further information contact Sarah Makin
For additional information, contact:
The House Republican Conference Policy Office