Arizona PIRG Applauds President’s Commitment to Student Aid

Statement of Diane E. Brown, Executive Director, on the State of the Union Speech

Arizona PIRG

“While the President proposed a freeze on many funding areas for three years, we are thrilled at his commitment to a greater investment in higher education.

Time and again, America has seen the college educated strengthen the nation’s social and economic fabric. Investment in education is proven to strengthen the economy. We applaud the President for reaffirming that investment in the education of our young adults is essential to the country’s recovery and long-term strength.”

Recent trends have shown states and institutions of higher education, facing recession and budget shortfalls, must use tuition hikes to maintain budgets.  This increased financial burden on students and families results in an over- reliance on loans to pay for college.  As a result, students deciding to attend college may drop out rather than risk the significant debt burden to pay for college.  Current students end up working more and suffering academically.  Nearly half of all students enrolled full time work 25 hours or more per week, and a quarter working full time.  Students graduating with crushing loan debt, averaging $23,200 in 2008, are forced to put off marriage, children, and home purchase.  These trends, already problems before the economic downturn, are now further exacerbated by depleting 529 savings plans and high unemployment.

President Obama committed to increasing the federal government’s corner stone need based financial aid program, the Pell grant, on which almost seven million college students rely in order to access college.

“Increasing the Pell grant for students is far and away the single most significant higher education investment that the President could undertake to communicate to students and families that he understands their struggles to finance college. It could not come at a better time.”

Another of President Obama’s higher education priorities is to expand the federal Income Based Repayment program to help students manage rapidly increasing debt levels. The proposal will reduce the current cap on a borrower’s monthly federal loan repayment from 15% to 10% of their discretionary income. The current program forgives a borrower’s debt after 25 years in the current program, but the new proposal will reduce that to 20 years.