Candidates Disagree on Future of Financial Aid


Published: October 16, 2008

While both presidential candidates have expressed concern over the increasing number of students who cannot pay for college, their plans for remedying the situation differ greatly. Although Fordham experts disagree on which approach is best, there seems to be a consensus that the issue of the decreasing affordability of higher education must be addressed in order to preserve America’s competitveness in a global market.

According to The College Board, 75 percent of undergraduate students received some form of financial aid in the 2006-2007 school year.

Peter Stace, vice president for enrollment at Fordham, stated that students are facing high interest rates on loans right now because of the state of the economy. He commented that some families who qualified for a loan last year will not be able to get a loan this year due to overall tightening credit standards. He added that state government programs meant to help families pay have not kept up with the rising costs of higher education, and therefore students have to look elsewhere to fund their educations.

An important element of federal financial aid is the Pell Grant, which is a federal need-based grant provided to low-income students, according to the Web site for the U.S. Department of Education. The maximum amount that can be granted to a student in the form of a Pell Grant currently is $4,050 per year.

According to Sen. Barack Obama’s, Ill.-Dem., College Affordability Plan, he plans to increase this maximum to $5,100 per year immediately, and over the course of the next few years, to $5,400. This is to ensure that “the award keeps pace with the rising cost of college inflation,” according to his campaign Web site.

Although Sen. John McCain’s, Ariz.-Reb., campaign Web site does not specifically mention Pell Grants, an Associated Press article on this issue stated that he would “consider raising Pell awards if there is a pressing need and the budget allows.”

The biggest change that Obama said he will institute, according to his official campaign Web site, is the American Opportunity Tax Credit. This would provide a student with $4,000 toward his or her higher education in exchange for 100 hours of community service. According to the Web site, this amount would cover “two-thirds the cost of tuition at the average public college or university and make community college tuition completely free for most students.” Statistics provided by College Board prove this statement true; in the 2007-2008 year, the average cost of a four-year public school was $6,185.

According to the Associated Press article, the McCain campaign criticizes this aspect of the Obama campaign for the increase in government spending that it would necessitate. The Obama plan would require approximately $10 billion in tax credits. The Obama campaign states that this extra money would come from cutting other federal programs, such as eliminating the HOPE and Learning Lifetime tax credits, which currently provides students with a maximum of $2,000 per year.

Although McCain does not propose a specific plan to provide students with access to more aid, the official Web site for the McCain campaign expresses the candidate’s desire to “simplify federal financial aid” by “consolidating federal programs,” thereby allowing students to “better understand their eligibility for aid.”

Janis Barry, associate professor of economics at Fordham, said that she sees Obama’s tax credit plan as a “win-win situation.” She stated that Obama “predicated on the idea that voluntary service can produce real value that the government would have to pay for anyway.” By allowing students to participate in such a program, Barry said that she feels that the government is both rewarding effort and providing incentive for students.

“We will end up with a more educated labor force, which is something that benefits all of us,” Barry stated. “We make it back big time when these students graduate and start paying taxes. [The Obama plan] is cost effective and highly desirable,” she said. “It more than pays for itself.”

James Scalera, FCRH ’09 and secretary of the Fordham Republicans, said that he finds this aspect of Obama’s plan “idealistic.” Considering the fact that many students either take longer than expected to finish college or drop out all together, he said that he doesn’t “support taxing more in order to provide every student who could potentially go to college with unconditional aid.”

Robert Isabella, FCLC ’09, echoed Scalera’s sentiments and stated that he believes Obama’s plan is unfavorable because “billions of dollars in government spending will only serve to drive up the price of college even further.” In the end, Isabella said that he believes pouring money into education in this way will actually have the opposite effect than intended.

Scalera stated that he would like to see more aid awarded based on merit, if any, and both he and Isabella expressed support for McCain’s policy in the fact that it would not require spending any more federal money.

Stace cited a different part of Obama’s plan that he said he considered risky. Currently, there are two ways to borrow money from the federal government: the Direct Loan system, which is funded publicly, and the Federal Family Education Loan Program (FFELP), which is funded privately.

Obama has proposed to eliminate  FFELP, leaving only the Direct Loan program to lend money. Stace stated that the reason these programs are up to the standard that they are now is because of the competition between them. Therefore, he said that he fears that without this competition, accountability will decrease.

Despite this hesitancy, Stace noted the fact that Obama’s more detailed plans may be a sign of a greater commitment to making education more affordable than McCain’s more general approach. “There are a lot of important issues right now, and how much time each candidate spends on each of these issues shows how high of a priority he feels it is.”

Johanna Francis, assistant professor of economics at Fordham, echoed Stace’s sentiments and said that, “It seems pretty clear that education would be a priority in an Obama administration, and [it’s] not clear whether that would be the case in a McCain administration.”

Francis went on to point out “big picture issues” that could affect either candidates’ actions. “If federal taxes were reduced for most families, then that tax saving might outweigh anything offered in federal tax credits. Similarly, there are a lot of public education issues at the state level, such as a need to provide more funding for public education… [that] would require raising taxes at the state level. It’s difficult to disentangle all of the issues to figure out which government plan would provide the most money for higher education.”

Barry criticized McCain, stating that his is a “do-nothing policy” that is “short-sighted in a 21st-century economy.” She cited the fact that only one quarter of the U.S. population has a four-year college degree right now, which, in her opinion, is not enough to keep us globally competitive.

Stace also expressed concern over America’s place in the global market, stating that our country is falling behind the rest of the world in the education of our population. “A lot of people are excluded from education because of financial reasons,” he said.

Barry stated, “Young U.S. students are no longer competing with one another; they are competing with a highly educated global elite. This isn’t a question of if [we do something about the financial aid situation].” She said, “It is a question of must.”