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FOR IMMEDIATE RELEASE:                      
Robert Brandon or Amy Collins Law
Toby Chaudhuri, 202-955-5665




New Report: Obama Budget Proposes Direct College Aid For

More Than A Quarter Million Additional Students Nationwide


WASHINGTON, D.C. – Students from low and middle class backgrounds would benefit significantly from the higher education proposals contained in the President’s budget, according to the Campaign for College Affordability.  In a report released today by the Institute for America’s Future and USPIRG, more than 260,000 additional students across the country would receive Pell grants if excessive lender subsidies are cut.


With the average cost of tuition at a public college increasing by 29 percent between 2000 and 2007 and up 5 percent last year alone, President Obama’s budget calls for the cut in lender subsidies to make the financial aid system more efficient. His proposal would provide an average Pell grant of $3,357 to more than 5 million recipients nationwide.


Leaders of the Campaign for College Affordability, a major national education coalition, held a conference call with reporters today to release the new report, calling for support of the higher education investments in the president’s budget.


Speakers on the call explained how the president’s proposals would increase and expand Pell grants and Perkins loans, make the American Opportunity Tax Credit permanent, broaden the U.S. Department of Education Direct Loan program, phase out bank loan subsidies and create state and federal partnerships to help students complete their college education. (See fact sheet below.)


Robert Brandon, the coordinator of the Campaign for College Affordability coalition, said the president’s budget proposals would make major changes to the federal financial aid system so more families can pay for college. 


“The nation’s social and economic well being relies on the number of students who can attain a college degree, so we need to make higher education a national priority,” said Brandon. “That’s why we formed the Campaign for College Affordability and why we are mobilizing thousands of students and families across the country to support the president’s plan.”


With more and more high school graduates putting off college because they can’t afford it, Campaign for America’s Future co-director Robert Borosage said families who are increasingly struggling to make ends meet need help to pay for college. Borosage noted that recent projections show that the country will fall 16 million degrees short of meeting workforce needs in the next 15 years.


“Our competitors among the industrial nations are outrunning us,” said Borosage. “The economic crisis only underscores the need to invest in access to higher education, especially if we are to compete globally in the long run.”


USPIRG Higher Education Program Director Christine Lindstrom said President Obama’s budget plan shifts resources to students and families, away from the banks.


President Obama’s plan reinvests in college students by increasing the Pell grant and expanding the numbers of students who can receive aid,” said Lindstrom. “The proposal cuts excessive bank and lender subsidies from within the student loan programs and redirects the aid to those who need it most – struggling students and families.”


NAACP Washington Director Hilary Shelton said it’s time to open more doors for students who want to go to college.


“Doors of opportunity have been closed on too many people wishing to pursue higher education,” said Shelton.  “I am pleased that the Pell grant increase and the expansion of the Perkins loan program will serve to ensure that those doors of opportunity remain open for all.”


United States Student Association president Carmen Berkley, who herself pays hundreds every month in student loan debt, said students across the country are on the march, mobilizing support for the president’s proposals.


“Hundreds of students from USSA affiliates across the country came to Washington earlier this week to press Congress to support efforts to make college more affordable,” said Berkley.  “We plan to continue mobilizing students and working with the participating organizations within the Campaign for College Affordability to push for the proposals included in the budget and beyond.”


The Campaign for College Affordability supports increasing direct grant aid to students; making student loan debt more manageable; providing increased educational opportunities through public service; reinvesting in higher education in state budgets; and increasing investment in community colleges.


Groups in the Campaign for College Affordability coalition include the AFL-CIO, American Federation of State, County and Municipal Employees, American Federation of Teachers, American Medical Student Association, Campaign for America’s Future, Campus Progress, Demos, NAACP, National Consumers League, National Education Association, Rock the Vote, Service Employees International Union, USAction, US PIRG, United States Student Asssociation and Working America.


# # #


**NOTE: An electronic copy of the report is available at . For more information on the Campaign for College Affordability coalition, please visit**





President Obama’s budget addresses both the immediate economic concerns as they relate to higher education as well as sets the stage for future higher education investment and success.


Increases The Maximum Pell Grant To $5,550, Makes Pell Grant Funding Mandatory, And Keeps Future Increases Tied To Inflation.

Nearly 5.6 million students from low and moderate income households are able to attend college this year due in part to Pell grants. Originally designed to cover 80% of the cost of college, Pell grants currently cover just 1/3 of the cost. Presently, Pell grant funding is discretionary and determined by the annual budget process. The budget will make Pell grant funding mandatory to help eliminate uncertainty and prevent funding shortfalls. The budget also increases the Pell grant maximum to $5,550 for the 2010-11 school year and indexes the maximum grant to grow with inflation in the future.


Makes The Partially Refundable $2,500 American Opportunity Tax Credit Permanent

The American Recovery and Reinvestment Act created a new partially refundable $2,500 American Opportunity Tax Credit over the next two years to provide a tax break to millions of families, including low-income families who don’t pay taxes and therefore currently get no tax relief for college. Up to $1,000 of the credit is refundable for low-income families, and the credit itself is phased-out for taxpayers whose adjusted gross income is in excess of $80,000 ($160,000 for married couples filing jointly.) The budget proposal makes the American Opportunity Tax Credit permanent.


Broadens The U.S. Department Of Education Direct Loan Program And Phases Out The FFEL Program

There are two federal student loan programs - the Federal Family Education Loan (FFEL) program and the Direct Loan program. FFEL loans are federally guaranteed loans issued by banks and other lenders, who are provided subsidies by the federal government for providing the loans. The tightening of credit markets essentially made the FFEL program untenable on its own last year prior to the passage of the Ensuring Continued Access to Student Loans Act. The proposed budget would end the FFEL program and subsidies to lenders on all federal student loans beginning in July 2010. The Direct Loan program, which has operated successfully since 1994, issues loans directly from the U.S. Department of Education. Transitioning entirely to the Direct Loan program is projected to save taxpayers $4 billion a year that can be used for increased student aid, rather than lender subsidies.


Expands and modernizes the Perkins Loan program.

Perkins Loans are low-interest federal loans available to students enrolled in a participating college or university with a demonstrated exceptional financial need not met by Pell grants or other federal loans. Currently, only 1,800 out of 4,400 institutions participate in the Perkins loan program. The budget proposal would seek to make Perkins Loans available to more than double the number of institutions it currently serves. The budget would also increase funding for Perkins Loans by $5 billion – up from the current $1 billion available in Perkins Loan aid. President Obama also proposes restructuring the program to provide an estimated 2.7 million additional students with the average Perkins Loan each year – a five-fold increase over the current 500,000 students receiving Perkins Loans.


Improves college completion through State-Federal Partnership

The budget provides for a five-year, $2.5 billion fund available to states for innovative programs and research aimed at improving college success and completion rates, particularly among students from disadvantaged backgrounds.


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