College students of all stripes are taking on more and more debt, and President Obama’s 2015 budget proposal would make it easier to dig themselves into an even deeper hole. Among a number of education proposals was one to raise the maximum amount that can be given to a student in Pell Grants and to make Perkins Loans more widely available. The Chronicle of Higher Education explains:
For students, the proposal would raise the maximum Pell Grant to $5,830 and make permanent the broadest tuition tax credit, the American Opportunity Tax Credit. It would extend the student-loan program’s most generous income-based repayment plan, Pay as You Earn, to all borrowers, and would exempt from taxation any loan forgiveness provided under that plan. […]Like several past budgets, the proposal for the fiscal year that begins on October 1 would change how campus-based aid is allocated to institutions and would remake the Perkins Loan program, expanding it from $1-billion to $8.5-billion.
Obama is selling this as a way to make college more affordable, but to us it looks like a foolish reinforcement of an old policy already riddled with problems. The wide availability of student loans and federal aid programs has been a key enabler of tuition increases over the past few decades. Rather than making it easier for students to borrow enough to pay sky-high tuition fees, federal policy should be geared toward making education cheap enough that students don’t have to graduate under a massive debt burden.