Jobs & The Economy: Putting America Back to Work
“The American Jobs Act answers the urgent need to create jobs right away. But we can’t stop there. We have to … start building an economy that lasts into the future — an economy that creates good, middle-class jobs that pay well and offer security… If we want [companies] to start here and stay here and hire here, we have to be able to out-build and out-educate and out-innovate every other country on Earth.”
Helping Middle-Class Families Pay for College
To create true middle-class security, we need to out-educate the competition. That’s why President Obama set the goal that by 2020, the United States will once again have the highest proportion of college graduates in the world. To achieve this goal, the President has fought to lower the cost of college for parents and students by passing a tax credit worth up to $10,000 and making Pell Grant awards larger and more widely available. He's called on Congress to make that tax credit permanent and prevent the interest rate on subsidized Stafford loans from doubling in July of 2012. And he reformed the student loan system, ending government subsidies for banks and using the savings to help more Americans afford their loan payments.
President Obama believes that the most important contest we face today is not between Democrats and Republicans -- America’s contest with competitors across the globe for the jobs and industries of our time is the one we must win. To secure prosperity for all Americans, we have to out-innovate, out-educate, and out-build the rest of the world.
A higher education is not just a pathway to opportunity -- it is a prerequisite. Over the next decade, nearly eight in ten new job openings in the U.S. will require some workforce training or postsecondary education. And fourteen of the thirty fastest growing occupations in America require at least a four-year college degree. Rising levels of education are critical to creating shared economic growth.
In 2010, the President signed the Heath Care and Education Reconciliation Act (HCERA) to help address college affordability, access, and success, and to regain America’s standing as a world leader in higher education by the end of the next decade. This legislation will help the nation reach the President’s goal, in part by putting college in reach for a greater number of students:
Federal Financial Aid that Puts Students First
By shifting the nation’s student aid system to the Direct Loans program, the HCERA put an end to wasteful subsidies to banks and used much of the more than $40 billion in savings to strengthen college access for America’s Pell Grant recipients. Together with previous investments, funding under HCERA will more than double the amount of resources available to Pell Grants since President Obama took office, growing the award from $4,730 in 2008 to $5,550 today. These historic new investments were protected in the Budget Control Act of 2011 and will be spared any downsizing in upcoming negotiations.
Additionally, President Obama's "Blueprint for College Affordability" proposes updating the way the federal government provides student aid to colleges and universities. Under the proposed system, colleges that do the most to provide students with good long-term value will be rewarded with additional dollars to help students attend. Those that don't act responsibly in setting tuition will receive less in terms of federal aid. Changing the way aid is allocated will encourage schools to focus on three principles:
- Setting responsible tuition policy: offering relatively lower net tuition prices and/or restraining tuition growth;
- Providing good value to students and families: offering quality education and training that prepares graduates to obtain employment and repay their loans; and
- Serving low-income students: enrolling and graduating relatively higher numbers of Pell-eligible students.
Better Information to Make College Selection Decisions
President Obama has proposed three new tools to help students and their families understand all the available information about college costs and quality so they can make informed decisions about higher education. These include:
- The creation of a College Scorecard for all degree-granting institutions to help students choose a college that offers the kind of education they hope to pursue at a price they can afford.
- A requirement that all colleges provide a uniform "Financial Aid Shopping Sheet" to help students better understand the type and amount of aid they qualify for and easily compare aid packages offered by different institutions. The Consumer Financial Protection Bureau and the Department of Education have already launched a project to create a model financial aid disclosure form that makes the costs and risks of student loans clear upfront – before students have enrolled – by outlining their total estimated student loan debt, monthly loan payments after graduation and additional costs not covered by federal aid.
- A database of earnings and employment information about graduates from individual colleges and universities to give students a better sense of the life they’ll be able to build once they graduate from a particular school
More Affordable Student Loans
To ensure that Americans can better manage their student loan payments, the HCERA provides student borrowers new choices in how they repay their loans, including an income-based repayment option to cap monthly repayments at 10 percent of income for borrowers after 2014, and to have loans forgiven after 20 years. And the President’s new “Pay as You Earn Plan” will allow about 1.6 million students to take advantage of this option starting in 2012. Public service workers --such as teachers, nurses, and those in military service -- will see any remaining debt forgiven after 10 years.
President Obama also called on Congress in his 2012 State of the Union address to stop the interest rates on subsidized Stafford loans from doubling in July of 2012.
Building American Skills through Community Colleges
President Obama has proposed ushering in new innovations and reforms for the nation’s community colleges to raise graduation rates, build industry partnerships, expand course offerings, and improve career and educational pathways. The HCERA includes a $2 billion investment to help America’s community colleges develop, improve, and expand education and career training to workers.
