Schooling colleges

23 August 2013 By Daniel Indiviglio

The president aims to hold down tuition and loans by rating schools according to the value they deliver. But a proposed cap on debt repayments could encourage even more student borrowing. That and similarly counterproductive details pull down an otherwise useful program’s grade.

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U.S. President Barack Obama on Aug. 22 unveiled a proposal for cutting college costs and student loans.
A major part of the plan would establish a college ranking system based on factors like average tuition, student debt, percentage of students receiving need-based Pell Grants, graduation rates and earnings after graduation. The system would help prospective students select colleges that offered the best value. It would also be used in determining federal student aid, with larger grants going to students who attend higher ranking schools.
Colleges that kept their costs down and catered to poorer students - and earned higher rankings as a result - would theoretically be in a better position to compete for applicants. Lower costs could also reduce the size and number of school loans. What’s more, under Obama’s plan, debt payments would not exceed 10 percent of any borrower’s monthly income.

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