Obama plans to change distribution of financial aid

By Will Wright | Assistant News Editor

wwright@kykernel.com

President Barack Obama announced a proposal to hold universities accountable to their students by ranking schools under new criteria that will be tied to federal financial aid.

The proposal, if passed by Congress, will rank colleges before the 2015 school year based on criteria like tuition, the average amount of debt of graduates, percentage of lower-income students and retention.

Ultimately, the administration’s hope is that federal financial aid will be tied to those rankings, so that a student who decides to attend a higher-ranked college may receive more federal grants and loans than one who attends a lower-ranked college.

Obama would like to see financial aid tied to rankings by 2018.

The goal is to hold universities accountable for their education, and to make higher education more affordable.

Currently, most of the $150 billion in annual federal student aid is given to colleges based on how many students enroll, not on retention rates or amount of a graduate’s debt, according to The New York Times.

UK students received about $192 million in federal student financial aid in the 2011-12 school year, according to the UK Office of Student Financial Aid.

This includes Federal Pell Grants, Federal Work-Study, Federal Perkins Loans and Federal Direct Loans.

About half of UK students graduate with some debt, said UK Spokesman Jay Blanton. Of that half, the average debt is under about $23,000, Blanton said.

Borrowers now graduate with an average of more than $26,000 in debt, according to the New York Times.

UK increased the amount of scholarships and grants for students this current budget year from $65 million to $75 million, Blanton said. This is money those students would not have to pay back.

UK has the highest graduation rate among public universities in Kentucky with 59.2 percent, according to Collegemeasures.org. Murray State University has the second highest with 52.4 percent and the University of Louisville is third with 50.8 percent.

In the fall of 2012, about 85 percent of all Kentucky undergrads received either grants or scholarships, Blanton said.

“It certainly holds schools accountable,” said Nimmi Wiggins, director of the Office of Student Financial Aid. “But it’s hard to predict the results, whether the proposal will have an influence.”

UK President Eli Capilouto said in a meeting with the Kentucky Kernel that he is concerned Obama’s proposal is too simplistic.

“In theory it sounds good,” said Wiggins. “But what actually plays out in the real world is still unpredictable.”