Presidential Opinions

Presidential Opinions

Contrasting Obama and Romney campaigns’ student aid policies

Record numbers of students enrolling in college as well as an increasing reliance on student loans to finance the growing cost of college has vaulted student aid into the national spotlight this campaign season.

Both presidential campaigns are dedicating an unprecedented amount of time articulating their widely varying policies aimed at making college more affordable.

President Barack Obama’s administration has pushed for more student aid spending and more regulations to increase the return on the federal investment in higher education.

In contrast, Mitt Romney’s campaign promises to reduce federal student aid spending by streamlining the programs and to reduce federal regulations that create additional costs for campuses.

Despite these differences, Obama and Romney seem to agree on two things: First, that students and parents need better consumer information about the cost of higher education and student aid so they can make more informed decisions when choosing a school and determining how to pay for it; and second, they both would like to provide incentives for higher education institutions to keep tuition and fees from increasing.

As you compare campaign proposals, it is important to consider that a President’s influence on student aid policy is limited because Congress sets annual funding levels and passes legislation that has the greatest impact on award levels and eligibility criteria. Despite these limitations, the president can influence student aid policy using the authority and influence of his position and the regulatory process.

Pell Grants

Federal spending on student aid has increased dramatically during the Obama administration—with Pell Grant spending doubling from $15.4 billion in 2007-2008 to $34.8 billion in 2010-2011. However, the majority of this increase was due to factors outside Obama’s influence—specifically, the dramatic increase in college enrollment and Pell Grant program expansions passed during the Bush administration. Obama did successfully push for an increase in the maximum Pell grant and has fought Congressional proposals to cut Pell funding.

Both campaigns are quick to highlight the Obama administration’s record on Pell Grant spending, but for very different reasons. The Obama campaign uses it to demonstrate the President’s commitment to college affordability.

"You’d be hard-pressed to find any president who’s responded more aggressively on the question of college affordability and college debt than this one,” Obama’s Campaign Policy Director James Kvaal said at NASFAA’s National Conference in July. “He’s doubled the investment in Pell Grants. He’s doubled the investment in tax credits for college. ... He’s accelerated the implementation of the income-based repayment plan and made those terms more favorable.”
Romney is highly critical of this increased spending and maintains that it is driving up the cost of college.

“Flooding colleges with federal dollars only serves to drive tuition higher,” Romney states in his education plan. He asserts that the “expanding entitlement mentality has expanded the Pell Grant program,” putting it on unsure financial footing and forcing Congress to take steps to reduce the cost of the student aid programs.

Campus-Based Aid

To streamline student aid programs and reduce federal spending, the Romney campaign plans to reevaluate campus-based student aid programs like Perkins Loans and the Federal Supplemental Education Opportunity Grant (FSEOG).

“[Campus-based aid programs] favor certain states over others,” said Romney’s higher education policy advisor Scott Fleming at NASFAA’s National Conference. “There’s a degree of complexity and a degree of redundancy in federal financial aid programs that is not making it easier to administer financial aid and in a lot of ways is diverting costs to managing it at the federal level.”

Fleming contended that the Pell Grant program could be strengthened by eliminating some of the other student aid programs.
Obama’s FY2013 budget proposes increasing spending on campus-based aid programs and using these funds to motivate campuses to keep costs down, serve needy students well, and provide good quality and value.

“The campus-based aid that the federal government provides to colleges … is distributed under an antiquated formula that rewards colleges for longevity in the program and provides no incentive to keep tuition costs low,” according to a White House fact sheet.

Details of this proposal haven’t been fully articulated, and the higher ed community has raised questions about possible unintended consequences of this proposal because it could punish schools for factors outside their control, like declining state funding for higher education.

Student Loans

Romney criticizes the Obama administration for advocating to end the Federal Family Education Loan Program. Congress eliminated FFELP in the Health Care and Education Reconciliation Act of 2010 to help shore up funding for the Pell Grant program. Romney says he would reverse the nationalization of the student loan market and welcome private sector participation, although he hasn’t specifically said he would reinstate FFELP.

Romney also suggests that Obama’s efforts to provide student loan repayment relief through expanded Income-Based Repayment and loan forgiveness treats the symptom but ignores the causes of unmanageable student loan debt. Romney would tackle this issue by supporting “private-sector involvement to ensure students are clearly informed about their obligations when they apply for federal student loans, and that they receive support that goes beyond a call from a collections agent to help keep them on track to repayment.”

The Obama administration has also taken steps to ensure both students and parents have the information they need to make responsible borrowing decisions. The U.S. Department of Education recently launched the online Financial Awareness Counseling Tool to help students manage their debt and help financial aid professionals monitor their students. In addition, the Consumer Financial

Protection Bureau has launched several initiatives aimed at helping private student loan borrowers.

Education Tax Benefits

While Obama has announced his support for extending the American Opportunity Tax Credit, a partially refundable $2,500 tax credit for higher education costs, Romney has outlined a tax plan that would allow it to expire. Data show that higher education tax breaks increasingly benefit higher-income families and some higher education experts argue that these funds would be better used for financial aid programs that more effectively target low-income students.


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