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Updated on May 28, 2014

College affordability is on most parents’ minds these days. Investments in children’s 529 plans have been drastically reduced in recent months, tuition rates are increasing at an astronomical rate, and the forecast for future tuition rates is nothing short of frightening.

But relief might be in sight. President-elect Barack Obama has made it clear that college affordability is a top priority for his administration. Obama’s College Affordability Plan includes several key elements to support children and their parents in their efforts to afford and succeed in college. Here’s an overview of the plan:

Tax Credit

The American Opportunity Tax Credit will be fully refundable and will ensure that the first $4,000 of a college education is completely free for most Americans.

Financial Aid

Obama’s plan will simplify the financial aid process by eliminating the Free Application for Federal Student Aid (FAFSA) and its complicated calculations; aid will be based on a much simpler, yet equally accurate formula so that students can predict their eligibility well in advance.

College Readiness

Obama will provide $25 million annually in matching funds for states to develop Early Assessment Programs that will enable 11th graders and their families to determine if they are on track to be college ready by the time they graduate.

Pell Grants

Obama will increase the Pell Grant to $5,400 over the next few years; he will work to ensure that the maximum Pell Grant award is increased for low-income students.

Community College Partnerships

The Community College Partnership Program will strengthen community colleges by providing grants to analyze high-demand skills and technical education, to implement new associate of arts degree programs, and to reward institutions that increase their numbers of graduates and transfer students to four-year institutions.

Bank Subsidies

Obama will eliminate the more expensive private loan program and will direct that money into aid for students.

Parents are in desperate need of such reforms. According to the National Center for Higher Education and Public Policy's most recent report, college tuition has increased at a significantly faster rate than both family income and the cost of necessities such as medical care, food, housing, and transportation.

Steve Boilard, Director of Higher Education for the California Legislative Analyst’s Office, says much of the affordability discussion focuses on how much it costs students to attend college. But, he argues, equally important is looking at how much it costs overall for colleges to provide education to students. “In other words, in addition to looking at the price paid by students, we should also look at the price paid by taxpayers,” Boilard says. “Colleges like to talk about how the amount of money coming from the state hasn’t kept up with their costs, but it’s worth asking about what has happened to college costs. Have they increased faster than inflation? Why?”

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