Romney said he would re-introduce competition to the federal loan market by putting lending back into the private sector, which would undo the Obama administration’s efforts.
The plan says a Romney administration would “focus the Department on giving students and families with financial need the appropriate information about completion and persistence, loan repayment rates, future earnings, and other indicators to intelligently weigh the risks and benefits of the many options available to them, rather than limiting choices through punitive regulations.”
Whether or not Romney would cut federal spending on education across the board is uncertain. In the first presidential debate two weeks ago he pledged to preserve existing spending levels.
“I’m not going to cut education funding,” he said. “I don’t have any plan to cut education funding and—and grants that go to people going to college.”
But analyses of the Republican’s budget plan have shown Romney would cut education funding up to 20 percent. His running mate Paul D. Ryan’s own budget, which Romney has supported in the past, would let the American Opportunity tax credit expire and cap Pell Grant funding at its current level with an eye toward further cuts.
FOCUSED ON THE PRICE TAG
Both candidates have pledged to address the rising cost of college education, which they both pinpoint as the root of the student debt problem. During the 2011-12 school year, tuition and fees for four-year colleges were expected to average $8,240 for public schools and $28,500 for private schools, according to the College Board, a private national organization that represents more than 6,000 colleges and universities. In the past five years, tuition costs have grown 5.1 percent annually beyond the inflation rate.
In January, Obama proposed tying federal aid for Perkins loans and work-study subsidies to tuition in order to compel colleges to reign in costs if they hope to maintain federal subsidies. Though its sticker price ranks among the highest in the country, Harvard would not be subjected to funding cuts because its institutional financial aid program keeps what students pay low.
Similarly, Romney has said he would force universities to streamline costs. He said universities have had little incentive to make tuition more affordable with the influx of federal money under the Obama administration.
Also potentially in the balance are interest rates on federal Stafford loans. Congress voted in June to stop interest rates for the popular loans from doubling to 6.8 percent. Obama lowered the rate of the popular federal loans to 3.4 percent in 2009 and has pledged to keep it low if reelected. Ryan’s budget calls for the higher rate, and Romney’s statements on the question have been inconclusive.
TAKING A STANCE, NOT A CANDIDATE
Harvard’s financial aid program, which gives grant aid to 60 percent of the student body, relies less on federal loans than other public and private universities. Still, roughly 25 percent of students elect to take additional federal aid, usually in the form of loans.
“While we cannot speculate on the impact of the election on federal support for student aid, it is clear the country is facing some critical fiscal challenges and that federal support for student aid and research could be substantially impacted by the decisions made in coming months and years,” Faculty of Arts and Sciences spokesperson Jeff Neal wrote in a statement. “President [Drew G.] Faust, along with many of her colleagues, has worked hard in Washington to remind policymakers of the value of the federal partnership with universities in support of the next generation of leaders, innovators and new ideas to fuel the economy.”
Former University President Derek C. Bok said a university like Harvard must actively promote generous grant and loan policies for the good of colleges as a whole.
“All thinking people at Harvard ought to recognize that as far as higher education is concerned, it is quite important,” Bok said. “I hope that Harvard will always feel a certain special concern for higher education generally, whether its specific ox is being gored or not.”
—Staff writer Nicholas P. Fandos can be reached at nicholasfandos@college.harvard.edu.