Obama Outlines New Federal Student Aid Plan

President Barack Obama on Thursday proposed a plan to tackle soaring U.S. education costs with a new system that judges colleges and universities on their financial value and ties those ratings to disbursement of federal aid.

The Democratic president, who has spent much of the summer promoting new ideas to rev up the economy, unveiled his proposals at the start of a campaign-like bus tour through New York and Pennsylvania.

The plan calls on the Education Department to institute a ratings system before the 2015 school year that would allow students and parents to select schools based on the best value for the money.

Obama would then push Congress to tie federal student aid to these ratings by 2018, creating an incentive for schools to keep their costs in check.

The plan also aims to ease the pain of federal student loan debt by limiting payments on the loans to 10 percent of borrowers’ monthly income.

Major parts of the plan require congressional approval, which may prove difficult. Universities, many of which are already facing a cash crunch, are expected to push back against a ratings system that may be more difficult to influence than private-sector rankings.

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