Obama's Plan to Make Education Affordable & Achievable for Everyone

During his campaign, Barack Obama promised to put a college education within the reach of every American. Most recently he vowed to see the U.S. Be a world leader in college graduation rates by 2020. How will he make these things happen?

obama money

With tuition costs rising dramatically and grant aid unable to keep pace, more and more people are having trouble coming up with the massive amount of money required to pay for college. In the last ten years, more than two million academically qualified students have had to give up on any idea of a college education just because they couldn't afford it.

For the first time in U.S. history, people are entering the workforce less educated than their parents.

This critical problem was addressed time and time again by Barack Obama in his presidential campaign. In a recent speech before Congress, he promised to make sure that the United States leads the world in its college graduation rate by 2020. (The nation currently holds the #10 spot.)

How will he do it?

The American Opportunity Tax Credit

The American Opportunity Tax Credit, originally proposed by Barack Obama, is a partially refundable1 2 3  tax credit (40 percent) specific to the tax years of 2009 and 2010. The AOTC increases the Hope Scholarship Credit to cover 100 percent of qualifying tuition and fees (up to $2,000) during one taxable year, and then 25 percent of the next $2000 in qualified tuition and fees. The credit cannot exceed $2,500, and is phased out for those taxpayers earning over $80,000 per year ($160,000 is the cap for married couples filing jointly).

Pell Grant Adjustment

Pell Grants have been the primary source of aid for low-income students for years. Unfortunately, these government grants haven't grown with tuition costs. Today, Pell Grants cover just 32 percent of college costs. Two decades ago these grants paid for more than 55 percent of costs at four-year public institutions.

Obama has proposed an increase to the maximum Pell Grant award amount. The increase will up the limit from $4,730 to $5,550 in 2010-11. Obama also wants to make these grants a guarantee so that they are not subject to annual fluctuations. This means that students will know what they're going to receive from year to year, no matter what happens in the economy. If the universities overspend their grant account, the government will cover the cost of grants anyway.

Streamlining the Process of Financial Aid

Anyone who's ever applied for financial aid knows that the process is not only ridiculously complex, but seriously flawed. Obama would like to completely eliminate all 127 pages of the FAFSA (Free Application for Federal Student Aid) and the complicated calculations associated with it. Instead, the president would like families to check a box on their federal tax form that will authorize the use of tax information to calculate financial aid. This way, students can know well in advance the amount of aid they may expect to receive. Experts believe that this simplification will encourage more people to apply for college.

Will Any of This Work?

All of Obama's plans for higher education are a step in the right direction, but there is still a lot of work to do. College costs have grown more than 40 percent in the last five years alone. More than 60 percent of all students graduate with massive amounts of debt--the average is $19,000 per student. Until this issue of rising tuition costs is directly addressed, the idea of affordable education for everyone will most likely remain a dream

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