Even though Congress failed to pass a plan to keep the student loan interest rate at 3.4 percent Wednesday and the interest rate on subsidized Stafford loans may double, states plan to keep moving on their own to keep college affordable.
“We’re not waiting for Washington, D.C., policy to try and do things in the states,” said Teresa Lubber, Indiana's commissioner for higher education, at the annual meeting of the State Higher Education Executive Officers (SHEEO) Association in Washington, D.C, Wednesday. “We’re doing a lot based on trying to incentivize student success through distribution of financial aid.”
Indiana’s 21st Century program, for example, aims to help lower-income students afford a college education. Those who qualify are guaranteed up to four years of undergraduate tuition at any participating public college or university in the state. The four-year limit is supposed to encourage students to finish in a timely manner.
Such an approach to financial aid reform, however, has faced some skepticism.
Geoffrey Garin, president of Hart Research Associates, said that in his group’s survey of state legislators about post-secondary education challenges, most lawmakers liked the general idea of basing financial need on completion times, but the potential for penalizing some students who have extenuating circumstances that prevent them from graduating on-time didn’t sit well with them. The United States ranks 12th in the world in college completion.
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At the SHEEO meeting, U.S. Education Secretary Arne Duncan said his department is focused on bringing the states in and letting them help decide which policies and reforms will work best to make college more affordable. He stressed the need for the federal government and states to work together to not only provide financial relief for students but also improve the quality of education and make it more accessible.
Duncan had also encouraged Congress approve the plan to leave interest rates at 3.4 percent, but they failed to do so. Unless Congress acts in the following weeks, the 6.8 percent interest rate means students will likely be paying approximately $2,600 more when they get to campus in the fall.
“We know how expensive college is today for so many young people,” Duncan said. "We need to start finding ways to reduce those costs. But to see costs actually double on interest rates, to me just makes no sense whatsoever.”
