Obama Proposal May Address Growing Education Gap

Some policies may help low-income students to complete college.

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Recently, the New York Times reported on the growing education gap between low-income and affluent students. One study cited found that since the 1960s, the gap in standardized test scores has grown by about 40 percent.

And the gap isn't limited to primary and secondary education. A separate University of Michigan study, also cited in the article, found that since the late 1980s, the gap in college completion grew by about 50 percent.

Let's focus on the growing gap in college graduates. (We are, after all, the Student Loan Ranger.) The University of Michigan study focused on two generations of students: those born from 1961 to 1964 and those born from 1979 to 1982. Among the high-income students, by 1989, about one third of the first generation had finished college, and by 2007, more than half of the second generation had finished.

In stark comparison, by 1989, only 5 percent of the first generation of low-income students had completed college. (Contrast that with the 30 percent for affluent students.) By 2007, that number had increased only slightly: Nine percent of the second generation of low-income students had completed college; more than half of the high-income contingent had done so.

Researchers and scholars speculate as to possible reasons underlying the growing gap, such as the ability of high-income families to put more time and money into nurturing education and literacy opportunities for their children. They seemed, however, to diverge on possible ways to address the issue. The closing comment of one scholar, "No one has the slightest idea what will work," prompted a number of letters to the editor

We're baffled that he is so baffled; it seems to us this may have something to do with access to education. And, as we often do, we want to add some thoughts from our Loan Ranger perspective.

As we've watched tuitions—and the student debt borrowed to cover these costs—rise continuously, we've reported on how higher education financial aid policies "price out" low-income students and how rising student debt harms low-income students. There can also be some detrimental effects of these students' debt aversion

We've also reported on how programs designed to assist low-income students are faring in the federal policy and budgetary jungle, including the tumultuous workings of Pell grant funding—and how important Pell grants are to low-income students' ability to access education.

[Find out how Pell grants are changing for 2012-2013.]

We think that to address the growing education gap, we need to address rising student debt and policies and cuts that make it increasingly difficult for low-income students to afford to attend and finish college.

[Find out how community colleges help low-income students finish school.]

Speaking of which, the administration has once again affirmed its dedication to maintaining Pell grants. We let out a sigh of relief—for now. President Obama's 2013 Budget Request uses a funding surplus from past years to actually increase 2013 Pell grants by $85.

The president's proposal contains some other provisions that affect low-income students (some positively, some not so positively), including changes to the Perkins loan program, increases to the federal work-study program, and limits on the interest subsidy on subsidized Stafford loans, which are available to low- and middle-income students.

The president has also requested that the current fixed interest rate on subsidized Stafford loans of 3.4 percent remain the same (it is scheduled to double to 6.8 percent this July), and that forgiveness for borrowers who repay their loans under the Income-Contingent or Income-Based repayment plans for 25 years not be considered taxable income.

[Understand the differences between Income-Based and Income-Contingent plans.]

We think some of the president's proposals can help low-income students access higher education, but some miss the mark. The Federal Education Budget Project has summarized and analyzed the president's proposals in an issue brief. The Student Loan Ranger recommends students read the details, because budgets matter (and often find funding through trade-offs, by cutting other important programs).

There's a lot more work to be done to address the growing education gap—and with its current rate of growth, we need to act now with a commitment to addressing the larger problem, rather than taking from one program to give to another. It's time to consider the forest, not just the trees. 

What do you think? Post your own proposals and comments below.

And stay connected with us to learn more as the budgetary process continues and more changes are made to student debt and student debt relief programs. We're on Twitter (@EJW_org #studentdebthelp) and Facebook, and we host free student debt relief webinars in which you can learn more about relief programs like Income-Based Repayment and Public Service Loan Forgiveness. The next one is Thursday, February 23, from 2 to 3 p.m. ET.

Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. In 2008, she served on the Student Loans Team in the Negotiated Rulemaking for the College Cost Reduction and Access Act (CCRAA) and has extensive knowledge of this landmark educational debt relief legislation. Radhika graduated from Loyola Law School Los Angeles. Prior to joining Equal Justice Works, she was a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.