College Costs Top Agenda Items as Presidential Candidates Try to Attract Youth Vote

Market Wire, June, 2008

In a presidential election year that has drawn increased attention from the electorate in general and a record number of young voters in particular, issues related to student loans, higher education, and college affordability are poised to become increasingly critical as November 4 approaches.

This year, students are voicing concerns more loudly about their ability to afford a higher education as ever-rising college costs -- up 22 percent in the last five years alone -- have been thrown into especially stark relief amidst a media and public storm about the potential unavailability of student loans facing families in the upcoming academic year.

"The growing cost of college is directly affecting the average student and forcing them to graduate hundreds of thousands dollars in debt," said Rachael Monnin, a student at American University, in a story in The Washington Post. "Instead of the fresh, bright, boundless future we're told about in high school, we're forced to worry about enormous loans and the necessity of a job lined up immediately after graduation."

But those "enormous loans," which have at least allowed families to cover their college costs, may not even be readily available as fewer lenders continue to offer student loans , still reeling from the current credit crunch and from legislation last fall that cut $21 billion in government subsidies to private lenders of federal student loans. More than 50 lenders to date have already suspended their now-unprofitable federal student loan programs, with another segment of lenders also suspending their non-federal, credit-based student loan programs.

Faced with investors and credit-rating agencies still skittish about borrower defaults after the subprime mortgage implosion, those lenders that are still issuing non-federal private student loans have been forced to tighten their credit restrictions, making these private loans even more difficult for students to obtain.

While the recently passed Ensuring Continued Access to Student Loans Act increases federal student loan borrowing limits and offers help to troubled lenders in a move meant to forestall a student loan availability crisis, the bill has been criticized for only partially addressing deep-seated, industry-wide problems. As over 17 million voting-age college students stand to be affected, come fall, by the turmoil in the student loan market, politicians have been unable to avoid discussions on the cost of higher education.

"Until now, [young voters] have had the feeling that no one cared very much about their generation or the defining issues of their lives," says Stephen Klineberg, Rice University sociologist. But with these young voters stepping up their participation in the political process and every vote a battleground in a hotly contested election season, this year's presidential candidates are being forced to care.

An estimated 44 million Americans ages 18 to 29 will be eligible to vote in this year's presidential election, a number that equals about 20 percent of the eligible voting population, according to a recent report sponsored by Rock the Vote, an organization dedicated to engaging young people politically.

Young voters have already turned out in increasing numbers this year to register their opinion. Young-voter participation in this year's primaries, for example, was up 25 percent in Ohio and 17 percent in Texas, compared to the 2000 primaries. While polls have shown that young voters, like the general electorate, tend to rank the economy and the Iraq War as their top concerns, these 18-to-29-year-olds are also predominantly concerned with the issue of college costs.

This college-aged crowd has traditionally tended to remain disengaged from politics: This age group has typically not found campaign issues to be relevant to them; they haven't mobilized in blocs to lobby for or influence campaign issues; and they haven't, as a rule, turned out in large numbers to vote. Presidential candidates, with little to gain by campaigning to what has largely been a non-voting demographic, have traditionally eschewed pushing youth-voter issues to the forefront of their platforms.

This year, however, a different political landscape is taking shape as politicians take notice of students' concerns, addressing the affordability of higher education in particular: Presidential hopefuls Hillary Clinton, Barack Obama, and John McCain have all made a point of discussing college cost reduction proposals in each of their election platforms.

Obama proposes a universal and fully refundable $4,000 tax credit, which would cover two-thirds of the average cost of a public college or university, or the full cost of a community college. Clinton's similar tax-credit proposal would cover $3,500 of the cost of college tuition.

Both Democratic candidates have also proposed an expansion of the federal Pell Grant program, which provides grants to the most financially needy college students. Clinton had proposed raising the maximum Pell Grant award from $4,050 to $4,800 -- an increase just passed with the Ensuring Continued Access to Student Loans Act -- coupled with periodic reviews of Pell Grant award amounts. Obama's proposal would raise the maximum award amount even further, to $5,100. Although McCain did not vote on the Ensuring Continued Access to Student Loans Act, he has historically, like Clinton and Obama, expressed support for increasing federal Pell Grant awards.