How to Pay for a College Education

How to Pay for a College Education
Are you one of the many Americans worried about how to pay for your child’s (or your own) college education? You should be, in the last five years college tuition has increased by fifty percent. To add to your worries, this year, the Bush administration along with the Republican controlled congress made the largest cut in federal financial aid ever; they slashed $12.7 billion for financial aid from the budget.

A college education has been the ticket to a middleclass lifestyle for many Americans. The United States used to rank first in the percentage of citizens with a post-secondary degree. It now ranks seventh. This not only reduces the income of it citizens but damages out competitiveness in a global economy. In the last thirty years economic and income gains have gone to college graduates, the average college graduate earns twice as much as a high school graduate. Forty two percent of all new jobs created will require a post-secondary degree. The Democrats have a plan to make college more affordable and create one million more graduates by the year 2015.

The American Dream Initiative College Plan will place the American dream within reach of all citizens. The first element of the plan is the $150 billion American Dream Grant. This would be a performance based grant of federal funds to the states. States would be allocated grant money based on the number of students enrolled and number of students who graduate. This grant would provide an average of $2,000 per student. In order to receive the grant states would have to agree to maintain current higher education spending and tie tuition rate increase to inflation. The grant encourages states to make four-year college education tuition free for student who perform community service.

The second element of this plan would replace the HOPE tax credit, the Lifetime Learning tax credit and the higher education tax deduction with a single, refundable, $3000 tax credit. The refundable aspect of this credit would make it available to people with little or no tax liability. Combining this tax credit with the grant money from The American Dream Grant should cover the majority of cost of a state or community college education.

The third element of this plan would hold colleges and students accountable. It would require colleges to publish their graduation rates and those with chronically low graduation rates would be required to present a plan to increase graduation rates. It would also require universities to freeze tuition rates to that of the freshman year for students who graduate in four years. It would reform elementary and secondary schools to align courses with the demands of colleges and employers.

The fourth Element of the plan embraces Sen. Hillary Clinton’s Non-Traditional Student Success Act. This act would make Pell grants available year round, expand grants to part time students, and raise the income allowance for financially independent students who work. Exclude the Earned Income Tax Credit and the childcare tax credit from financial aid determinations. It would aid parents attending college by increasing childcare grants for working parents and increase funding for on campus childcare centers.

Staying consistent with the Democrats pledge to pay-as-they go, they will fund this plan by eliminating wasteful corporate subsidies that distort the market and discourage competition. They will establish an independent commission to make recommendations to congress on which subsidies to eliminate in an up-or-down vote. The commission is expect to produce between $200 to $250 billion in savings over ten years. This plan will provide our children a future without mortgaging their future.

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