President to push for student aid overhaul

President Barack Obama is proposing a financial aid overhaul that for the first time would tie colleges' eligibility for campus-based aid programs — Perkins loans, work-study jobs and supplemental grants for low-income students — to the institutions' success in improving affordability and value for students, administration officials said.

Under the plan, which the president is expected to outline in a speech at the University of Michigan today, the amount available for Perkins loans would grow to $8 billion, from the current $1 billion. The president also wants to create a $1 billion grant competition, along the lines of the Race for the Top program for elementary and secondary education, to reward states that take action to keep college costs down, and a separate $55 million competition for individual colleges to increase their value and efficiency.

The administration also wants to give families clearer information about costs and quality by requiring colleges and universities to offer a "shopping sheet" that makes it easier to compare financial aid packages and — for the first time — compiling post-graduate earning and employment information to give students a better sense of what awaits them.

These proposed changes would all require congressional approval.

With student-loan debt now outpacing credit-card debt — and becoming a rallying point in the occupy movement — the administration has for some time promised to address the issue, knowing its potency with voters in an election year. The president met privately with a group of college presidents in December and has been collecting examples of colleges that have kept their costs from spiraling upward.

The administration officials who spoke about the plan did so on the condition of anonymity.

The officials stressed that expanding the pool of money for Perkins loans would not require new tax dollars because those loans are repaid with interest. And even without new money, they said, it would be possible to change the formulas under which colleges receive funds for work-study jobs and Supplemental Education Opportunity Grants.

While Pell grants and Stafford loans are larger programs than the ones the administration wants to change, they are federally administered and can be used by students at any college.

In contrast, the campus-based programs the administration is proposing to change are administered by individual schools and institutions, whose financial aid offices have substantial discretion. About 1,700 colleges and universities now offer Perkins loans, a number that would increase to more than 4,000 in the new proposal.

While administration officials said the Perkins changes would have no impact on the federal budget, other parts of the plan — such as doubling the number of work-study jobs and keeping the interest rate on subsidized Stafford loans at the current 3.8 percent — would be expensive.