The Obama Administration is trying to enact legislation that will enable more people to go to college and level the playing field so that those who do attend are not overly financially burdened.
To begin with, starting in July of 2009 the Income-Based Repayment (IBR) plan was enacted. This provision allows graduates having financial hardship to adjust their monthly repayment for federal loans they took during their college education. A graduate who can demonstrate difficulty meeting his monthly loan repayment can adjust his payment to be based on his discretionary income which is calculated by family size and his Adjusted Gross Income (AGI). Right now the IBR is capped at 15% of that discretionary income, but there is a proposal to lower that cap to 10%. There already exists a loan forgivement for graduates who work in public service for 10 years.
A tax credit to families paying for college education has also been proposed. This $10,000 credit would carry for four years. Details that are not known are whether or not the credit would be a refundable amount or be used for Adjusted Gross Income (AGI) calculations. Also, it is not known if there would be income thresholds, meaning if the family was above a certain income level, they might not be eligible for the tax credit.
A third proposal is being made concerning Pell Grants. Pell Grants are a great help to lower-income families who have a student in college. They are grants, not loans, and do not have to be repaid—phew! They are based on need, not on merit. Already the size of these grants per student has been increased under the Obama administration; $4,731 was the maximum amount awarded through June of 2009. But, there is a proposal to increase the amount even more to $5,7120 for the 2011-2012 academic year. Of course, even though the award amount can change each year, whether or not that award will be made is contingent on funding from Congress.
Cross your fingers!