Seeking Solutions To The Student Aid Mess

"The financial aid system in this country is broken. There are many reasons why the system needs to be overhauled, but let's start with this one: the federal government is profiting tremendously when it lends money to college students and their parents," CBS's MoneyWatch reports. "To encourage an in-depth examination of the federal aid programs, the Bill and Melinda Gates Foundation awarded grants to organizations that could suggest solutions. Organizations that submitted papers included the College Board, The Education Trust, the New America Foundation and the U.S. Chamber of Commerce. ... Some of the Gates' groups are urging Congress to move to market-based rates rather than letting Congress continue to arbitrarily set them. Student groups want any market-based system to include salary caps. Two other areas that attracted a great deal of attention from the Gates participants were focused on loan repayment and tax credits. Under current law, borrowers with federal student loans can choose several repayment plans and some qualify for the income-based repayment plan. The IBR essentially allows students who are unemployed or underemployed to repay their student debts based on what they can afford rather than what they owe.  Some groups have suggested that graduates with federal student loans be automatically enrolled in the IBR program. Eleven of the 16 proposals called for consolidating, shrinking or killing off education tax credits, which are controversial because they are regressive. The tax credits chiefly benefit more affluent families whose children will be heading off to college with or without these credits. Money saved from curtailing the tax credits could be sunk into Pell Grants that benefit needy families. As a political reality, however, eliminating the tax credits is unlikely to happen. If you want to learn more about the proposals to revamp the federal financial aid behemoth, the National Association of Student Financial Aid Administrators has summarized the recommendations in a summary matrix."

NASFAA's "Financial Aid in the News" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.