President Clinton's Proposal To Make College Education More Affordable
There is a summary of the President's new State of the Union agenda
for higher education under the "Summary of proposal" link. These proposals
build on the President and Vice President's previous steps to make college
more affordable. Since 1993, the Administration has been dedicated to
expanding access to education and training beyond high school. New and
expanded programs provide over $50 billion in student aid annually --
compared to $22 billion when the President took office. These earlier
proposals have included:
- Hope Scholarship and Lifetime Learning Tax Credit. In 1997, the President
signed the Hope Scholarship and Lifetime Learning Tax Credit into law.
In 1999, these two measures provided an estimated $3.5 billion in tax
relief for 4.8 million families.
- Hope Scholarship. The Hope Scholarship is part of the President's
goal to make the first two years of college as universal as high school.
It provides a tax credit worth up to $1,500 per student against educational
expenses for the first 2 years of college. (The credit provides a tax
break of 100 percent of the first $1,000 of tuition and 50 percent of
the next $1,000.) Both the Hope Scholarship and the Lifetime Learning
tax credit phase out for individuals with incomes between $40,000 and
$50,000 and married filers with incomes between $80,000 and $10,000.
- Lifetime Learning Tax Credit. The President's proposed College Opportunity
Tax Cut builds on the Lifetime Learning tax credit. Under current law,
the Lifetime Learning tax credit provides a 20 percent credit on educational
expenses for college, graduate study, or job training. The credit covers
up to $5,000 of expenses per family through 2002 and then up to $10,000
- More Affordable Student Loans. The President's Direct Lending Program
and improvements to the student loan program have saved students an
estimated $8.7 billion on their loans over the last five years while
taxpayers have saved over $5 billion through student loan reform.
- $8.7 Billion in Savings for Students. Students who borrowed student
loans since 1993 will save $100 annually for each $10,000 in outstanding
loans -- and a total of $5 billion -- due to the lower interest rate
formula. Also, in 1993, the Administration reduced loan origination
fees, saving students nearly $3.7 billion to date. In 1999, in recognition
of widespread discounts available on guaranteed student loans, the Administration
reduced direct loan fees even further.
- More Repayment Options. Since 1993, borrowers have more flexibility
in managing their student loan debt. The income-contingent repayment
plan allows direct loan borrowers to repay their loans based upon their
income; after 25 years, any remaining loan balance is discharged.
- Creating the Direct Loan Program. Under the Direct Loan program,
students receive loans directly from the Education Department rather
than through government-guaranteed lenders. Because the Direct Loan
program is substantially less expensive for taxpayers than the guaranteed
loan program, taxpayers have saved over $4 billion over the past five
years. The program has pioneered the use of new technology, streamlined
loan processing and disbursement, and improved customer service in both
programs through competition.
- Strengthening the Guaranteed Loan Program. Federal subsidies for
banks and guaranty agencies have been pared down, saving taxpayers $1.6
billion over the past five years.
- Reducing Loan Defaults. The national cohort default rate has been
reduced from 22.4 percent seven years ago to a record-low 8.8 percent.
At the same time, collections on defaulted loans have more than doubled,
from $1 billion in FY1993 to $2.2 billion in FY1998.
- Expanded Student Aid Opportunities.
- Larger Pell Grant Awards For Needy Students. When President Clinton
took office in 1993, the Pell Grant maximum award was $2,300, the same
as it was in 1989. The maximum award has since increased by 43 percent
to $3,300 in 2001. The FY 2001 budget proposes increase in the maximum
to $3,500, a 52 percent increase over the 1993 level.
- Early Intervention to Help Low-income Students Prepare for College.
Based on an Administration proposal, the new GEAR UP program funds partnerships
between colleges and high-poverty middle schools. It was funded at $200
million in FY2000. The President's FY2001 budget proposes to increase
GEAR UP funding by 62.5 percent, bringing the total to $325 million
to fund mentoring, tutoring, and college scholarships for an estimated
1.4 million low-income students.
- College Outreach and Support for Disadvantaged Students. The Department's
TRIO programs helps low-income, students succeed in
college. Since 1993, funding for the program has increased from $388
million to $645 million; it now serves 730,000 students. The President's
FY2001 budget proposes to expand TRIO by $80 million, to serve an additional
- More Work-study Opportunities. Spending for Federal Work-Study increased
by 41 percent from 1993 to 2000. The President has requested a $77 million
increase in FY2001 to continue to allow one million students to work
their way through college.
- AmeriCorps education awards. Since 1994, over 150,000 AmeriCorps
volunteers have earned up to $4,725 for college while serving local
- Enrollment Rates Have Risen Under President Clinton. The percentage
of students who completed high school and went directly to college rose
from 61.9 percent in 1992 to 67.0 percent in 1997 -- an 8 percent increase
in the enrollment rate. Proportionately, enrollment rates increased
even more for African Americans and Hispanics over this period. For
African Americans, enrollment rates increased from 48.2 percent to 58.5
percent -- a 21 percent increase. Over this period Hispanics enrollment
rates increased from 55.0 percent to 65.6 percent -- a 19 percent increase.
[Source: U.S. Department of Education, The Condition of Education 1999]