Affordability Priorities

  • Advocate for sufficient funding to sustain the value of Pell Grant awards by ensuring an appropriations base of $4,860, given the escalating demand for awards. This amount will ensure the path of predictable and continuous growth laid out by President Obama as realized through the passage of the Health Care and Education Reconciliation Act of 2010.
  • As the Department of Education becomes the sole entity responsible for originating and servicing loans, ensure that the department delivers high quality service throughout the process, especially with regard to adequate and timely information, early outreach to delinquent borrowers, and more accommodating recovery efforts for borrowers in default.
  • Encourage the Department of Education to promptly contact delinquent borrowers in the Direct Loan Program, as well as borrowers whose loans were directly or indirectly purchased by the federal government, to avoid default. The department should put these borrowers in an appropriate repayment plan, including Income Based Repayment (IBR) and Income Contingent Repayment (ICR), and set up special handling for those borrowers who have recurring repayment problems.
  • Support a legislative change to require mandatory use of institutional certification of private loans by lenders. This will help ensure that students and families fully utilize state and federal grants and less expensive financing options (such as subsidized and unsubsidized Stafford Loans and PLUS Loans) before securing more costly private loans.

  • Support the extension or permanency of the American Opportunity Tax Credit (AOTC) as established in the American Recovery and Reinvestment Act in order to assist needy students. It expands the HOPE tuition tax credit.
  • for 2009 and 2010, increasing the tax credit from $1,800 to $2,500 for those two years. Taxpayers will receive a tax credit based on 100 percent of the first $2,000 of tuition, fees and course materials paid during the taxable year, plus 25 percent of the next $2,000 of tuition, fees and course materials. Up to a maximum of 40 percent of the amount of the credit is “refundable.”
  • Advocate for a provision in AOTC that exempts Pell Grants from being applied toward tuition and fees used to determine the tax credit, in order for low income individuals to take full advantage of the credit.

  • Support the establishment of a federal tax exemption for loan forgiveness proceeds for borrowers in the Income Contingent Repayment and Income Based Repayment programs. (Statement may be taken out per possible activity on tax extension bill).
  • Support the reinstatement and permanency of the Individual Retirement Account (IRA) Charitable Rollover, which expired in 2009, permitting individuals 70½ and older to transfer up to $100,000 from an IRA tax-free to charitable and other nonprofit organizations. This will help colleges and universities generate new or increased contributions to maintain benefits to students, particularly financial aid.



American families continue to identify college affordability as one of their biggest concerns. AASCU, representing more than 420 institutions and heads of systems on behalf of over 3.9 million students who attend AASCU institutions, advocates for a higher education finance model that ensures every student can afford a college education without the burden of undue debt. This model recognizes the interplay of federal, state, institutional and family funding sources, with a reliance on significant federal student support as its base, in order to meet the need of low-income individuals.

Student grants, student loans and tax policies all contribute to college affordability. AASCU believes that while each is an important piece of financing a college education, limited public resources should be targeted to the neediest students in the form of direct grant aid. Student debt should be limited, student loan repayment options should be flexible and manageable for students in all income categories, work-study opportunities should be available and financially feasible for students, and education tax benefits should be transparent. The reauthorization of the Higher Education Act saw the realization of several AASCU-supported policy provisions related to student financial aid and college affordability. These included a year-round Pell Grant, improved student loan counseling, and more transparency and accountability in the private loan market.

This past year, the passage of the Health Care and Education Reconciliation Act shifted the issuance of all federal loans into the Direct Loan Program. AASCU has and will continue to closely monitor the implementation of this transition to ensure that students experience a streamlined conversion, as well as informed servicing. In addition, the legislation provided for a steady and reliable increase in the Pell Grant maximum each year; however, this reliability is predicated on continued base appropriations. AASCU was also successful in securing “maintenance of effort” language that required states to maintain higher education funding associated with the K-12 education jobs funding measure. Moving forward, it is important to strengthen and build on these improvements. Many borrowers are not aware of the new payment options and benefits available to them. This leads many to become “defaulters” with harsh financial penalties and no statute of limitations. AASCU believes that the goal now should be to streamline and reform borrower repayment in federal student loan programs to ensure that all borrowers are able to repay their loans using an appropriate repayment plan without incurring penalties.