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Published: December 2008

College affordability is a critical part of economic recovery

Coalition: Student Loan

Consumer Action joined in a letter to the U.S. House of Representatives urging members to include an increase student aid in the economic stimulus package.

Below is a summarized excerpt of the letter:

A significant, short-term, and targeted increase in student aid will help build the skilled, educated workforce our nation needs for a sustained recovery. It will also help maintain our higher education infrastructure, which is imperiled by dramatic state budget shortfalls and rising costs. And unlike other recent stimulus efforts, this investment will make an immediate difference on Main Street because it will be used to purchase books, food, housing, transportation, and other essentials, as well as tuition and fees.

We propose a two-year student aid stimulus package to promote college participation for students at all income levels while limiting student debt. As outlined below, these temporary funding increases would mitigate the worst short-term effects of the recession on college access and student success, and position our families and economy for a real, sustainable recovery.

• Raise the maximum Pell Grant to $7,000 for the lowest income students and fully fund it along with the current Pell shortfall.
• Increase funding for the Federal Work-Study Program by 25 percent. Young workers tend to be hit first and hardest by rising unemployment, and they must compete with more experienced workers for the shrinking pool of part-time jobs that students rely on to make ends meet.
• Improve access to Parent PLUS loans.
• Provide a limited "emergency access" student loan pool for colleges that commit to providing adequate need-based aid.

Although some lenders and interest groups have suggested that simply raising or even eliminating federal student loan limits would solve the college affordability problem, their approach would do students – and our economy – far more harm than good. It would leave students of modest means to choose between taking on so much debt that it would be hard to get ahead even after this recession ends, or giving up on the best chance they have to get ahead at all. Raising federal student loan limits might also provide a strong incentive for colleges to increase tuition and engage in high-pressure sales tactics to capture more federal dollars at students’ expense. Even before this recession, more students were borrowing more money to pay for college than ever before. At least two out of three students who complete a four-year degree have student loans, and their average debt is already more than $22,000. Saddling students with more debt is neither an appropriate nor realistic response to the current economic situation.

Lead Organization

The Project on Student Debt

Other Organizations

American Association of Collegiate Registrars and Admissions Officers | American Association of State Colleges and Universities | American Association of University Women (AAUW) Campus Progress | Consumers Union | D_mos: A Network for Ideas & Action | Institute for Higher Education Policy | National Association of Student Financial Aid Administrators National Center for Public Policy and Higher Education | National Consumer Law Center | National Consumers League | State Higher Education Executive Officers | The Project on Student Debt | U.S. Public Interest Research Groups | United States Students Association

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