A Ladder To The Ivory Tower
Alex Carter is a research associate of Campaign for America’s Future .
The previous Republican-led Congress made a college education increasingly unaffordable for millions of people, pushing the American Dream that much further out of reach. The Democrats now in control of Congress have promised to right that wrong, and today students are leading the effort to hold them to their promise.
January 11 has been declared a National Day of Action for College Affordability. The stakes are huge. Too many Americans have felt the double whammy of Republican-imposed cuts in federal student aid and increases in student loan interest rates. As tuition costs outpace the rate of inflation, many parents don’t know how they will be able to finance their children’s college education. Every year the problem seems to get worse, and the numbers bear it out.
The Campaign for America’s Future reports that, since 2000, the average inflation-adjusted cost of tuition at a public institution has increased 42 percent while median household income, adjusted for inflation, had fallen $1,273. In 2005, a family making the median household income of $46,326 would have to spend one-fourth of that to cover the tuition for one child at a typical public four-year university. Paying the tuition at a typical private four-year university would eat up a staggering 57 percent of their income.
Hispanic-American and African-American families are hit disproportionately hard. More than three-fourths of Latinos planning to attend college apply for financial aid, according to a report by Excelencia in Education. So does an even larger segment—86 percent—of African-American college applicants.
The federal government has historically played a central role in making college affordable for Americans on the rise. The Morrill Act of 1862 gave federal land to the states to create what came to be know as land-grant colleges. After World War II, the G.I. Bill helped build an educated middle class.
But the 109th Congress hit higher education hard. It cut $12 billion from federal student loan programs and fixed the interest rate of Stafford Loans for students at 6.8 percent instead of a variable rate that would now average 6.1 percent. For parents who take out PLUS (Parent Loan for Undergraduate Students) loans on behalf of their children, the rate jumped to a fixed 8.5 percent. These fixed rates build in profits for the banks even though the federal government guarantees against default. In recent years, the variable interest rate has gone as low as 4.75 percent and the Congressional Budget Office estimates future interest rates to average 6.4 percent.
Meanwhile, Pell Grants are worth less in real dollars than they were 30 years ago. The president promised last year to raise their value, but the Republican Congress did not deliver.
If the students don’t like it, they are stuck. Before Congress changed the law, students could take advantage of the historically low interest rates to refinance or consolidate their loans. The new law restricts such consolidation. In other words, interest rates are higher and loans are bigger. It’s worse for students but better for banks.
On January 17, as part of the Democrats’ 100-hours agenda, the House of Representatives is scheduled to consider the College Student Relief Act of 2007. The bill would halve interest rates on subsidized Stafford loans over five years, resulting in a 3.4 percent interest rate by July 1, 2011. It would save the current typical student borrower $2,280 over the lifetime of the loan. In addition, U.S. PIRG Higher Education Project notes that by 2011, the average four-year college student beginning school will save $4,420 over the life of their loan.
Later, House Democrats plan to improve college affordability by raising the maximum Pell Grant award, working with colleges and other relevant stakeholders to devise strategies to address costs and examining the cost-effectiveness of the different student loan programs. This is an effort not just to highlight the contrast with the previous Congress, but to make friends with the next generation of voters while they are still in school.
Students and organizations are piling on support. Sponsors of the National Day of Action for College Affordability include Young Democrats of America, the United States Student Association, the League of Young Voters Education Fund, Rock the Vote, Campaign for America’s Future, Campus Progress, the NAACP, the National Education Association, US PIRG Higher Education Project, students, school administrators and parents from across the country.
The groups are uniting under the banner “Opportunity for All: Make College Affordable.” Rep. George Miller, D-Calif., and Sens. Edward M. Kennedy, D-Mass., and Richard J. Durbin, D-Ill., are scheduled to address the new cuts in interest rates at a Capitol Hill news conference today, in an effort to make college affordable for all. In addition, the coalition is conducting a massive media and lobbying campaign, using Facebook.com, email lists and text messaging.
“More and more parents worry that their children will be denied that opportunity because they simply can’t afford a college degree,” Kennedy has said. “The American dream is at risk if we don’t act to make college more affordable for our families and give our students the tools they need to succeed.” A progressive coalition is working in that direction. For the time being, at least, the wind is at their backs.