A federal spending package that would help remove financial barriers to college education and increase the number of graduates is awaiting Senate approval, Education Secretary Arne Duncan said in a conference call yesterday.
In President Barack Obama’s 2011 budget proposal released Monday, he emphasized the importance of an affordable education by outlining funding increases for K-12 education, community colleges and four-year universities.
Duncan touted the proposal as the largest increase in education spending since the GI bill — legislation that provides financial assistance for veterans attempting to pay for college.
He said it would stop subsidizing banks and funnel money saved, as much as $87 billion, back into the students’ pockets, helping those who are struggling to pay rising tuition costs.
The Student Aid and Fiscal Responsibility Act passed the House of Representatives in September but still needs Senate passage.
In the bill, the administration tackles the student loan system from a variety of angles.
By shifting government lending from indirect student loans, which require banks to act as middlemen, to direct student loans, the government would save millions. Duncan insisted this would not increase the national debt or cost taxpayers an extra dime.
The bill also aims to create a system that would allow more Americans to pay off student loan debt.
Although a system of Income-Based Repayment, which allows individuals with student loans to pay off their debt in increments based on their earnings, already exists, the bill would enable the Obama administration to expand it.
The current system caps student loan repayments at 15 percent of income. The pending legislation would reduce the cap to 10 percent of income and forgive outstanding debt after 20 years of consistent payments, a reduction of five years from the current system.
To encourage college graduates to enter lower-paying professions such as teaching or the police force, all loans would be forgiven after 10 years for those who enter the public service sector. The package aims to “remove handcuffs for folks who … want to teach” but cannot afford to do so because of their student loans, Duncan said.
Although reforming the student loan system is a priority for the administration, the president has set additional goals for higher education.
By the year 2020, Obama has said he would like to see the United States graduating the most students in the world. Duncan said the country must allocate money to education at every level and “build a culture around college completion.”
The proposal would also make permanent a $2,500 tax credit that was granted to families under the stimulus package to help them afford their children’s college tuition. It would also dedicate about $500 million over the next decade to improve online learning resources, such as online courses that colleges could take advantage of at little to no cost.
“What we’re trying to do is … get students into college, stay there and graduate and then chase their dreams,” Duncan said.
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