So far, the more than $787 billion of President Barack Obama's stimulus plan have been earmarked for investment across all sectors of the economy. Fortunately, higher education will be seeing some of this.
Under the stimulus plan, states will receive $53.6 billion to help prevent cuts to essential services like education. In our own state, Gov. Ed Rendell announced Tuesday that part of Pennsylvania's share of federal stimulus money -- $42 million of a total of $1.9 billion -- will be used to restore funding cuts proposed for Penn State, Lincoln, Temple and the University of Pittsburgh.
In addition, colleges and universities will also see a kaleidoscope of other benefits, including higher education tax credits, increases in Pell Grants and funding for work-study programs.
These are all programs that reduce financial barriers and will allow more students to attend college.
Perhaps the biggest and most impressive change under the Obama administration's plan, though, is a proposal to revamp the student loan process. Obama has called for all federal student loans to be directed through the Direct Loan Program under the U.S. Department of Education.
The proposed change would require all universities to make the federal program its sole source for federal loans and could dismantle all other federal lender-based programs. While Penn State signed on to the Direct Loan Program a year ago after the collapse of the Pennsylvania Higher Education Assistance Agency (PHEAA), this move will benefit college students across the country. The change will save an estimated $50 billion over the next decade, money that will be reinvested in aid to students.
Expanding the amount of money that can be borrowed from federal lenders is a move that benefits students. By centralizing the process of student loans, Obama is taking out the middlemen -- the Sallie Maes and PHEAAs of the nation -- and thus reducing the subsidies the government is obligated to pay these lenders.
The current system is prone to corruption, less efficient, and more expensive than Obama's proposal. It doesn't make sense to keep this system afloat. Once the transition to federal loans is complete, the money saved will be used to help needy students afford college.
Education is a public good, and it is in the government's best interest to make going to college as easy as possible for all its citizens.
Obama's proposal, as well as the stimulus package, addresses this ideal by streamlining the process of receiving student aid and allocating more money for needier students. It is good to see the government making a neccessary investment in education.
