Obama's HOPE Act: A Bid To Make College More Affordable

Illinois senator's first proposed bill will raise the maximum amount of Pell Grant awards.

U.S. Senator Barack Obama announced his first proposed bill on Monday, and it is a bid to make college more affordable.

The bill, called the Higher Education Opportunity through Pell Grant Expansion Act of 2005, or HOPE Act, will raise the maximum amount of Pell Grant awards by nearly 26 percent, from $4,050 to $5,100 a year, and increase it every year thereafter according to inflation rates.

"[This] comes to you from a promise I made during the campaign and one that I intend to keep now that I'm in Washington," Obama said to a crowd of about 200 students, faculty and media during a press conference on Tuesday at Southern Illinois University Edwardsville (SIUE).

"Right now, across America, children are dreaming about what they want to be when they grow up, and as their parents watch tomorrow's astronauts and doctors and teachers in action, they know that so many of those dreams are dependent on a college diploma," said the Illinois senator, who took office in January. "Everywhere I go, I hear the same story: 'We work hard, we pay our bills, we put away savings, but we just don't know if it's going to be enough when that tuition bill comes.' "

More than 5 million undergraduate students rely on the need-based award to support them through school, and 85 percent of its recipients come from homes with an income of less than $40,000. Pell Grants, the government's primary financial aid for college students, only cover 23 percent of the total cost of an average four-year public institution, Obama said, and they have not been indexed to the rising price of tuition or inflation. As a result, the current limit is worth $700 less than it was worth 30 years ago. Last year, more than 200,000 students were priced out of a higher education altogether because they could not afford the rising costs, which are climbing at almost 10 percent a year, according to the senator.

"If a student can't get enough under a Pell Grant, they usually turn to bank loans, but a lot of them don't want to do that," said Greg Conroy, assistant director of public affairs at SIUE. "This will definitely be able to help them a bit, and anything the government can do to bolster the grants is a good thing."

The student reaction to the senator's speech was overwhelmingly positive, Conroy said. When the senator addressed the crowd of students, he asked how many of them had to work in order to foot the bill for their tuition. "I swear almost every one of them raised their hand," he said. "People were applauding him and shouting. Every time he would talk about the Pell Grant, they were excited. They realized how much of a benefit this would be to them."

Scott Herbert, 37, spoke at the conference on the senator's behalf on what the Pell Grant has been able to do for him and opened his speech by saying, "If money makes the world go round, then for some it scarcely spins." The junior, who is currently pursuing his undergraduate degree in finance with a minor in mathematics, knows the financial struggles many students must go through, since he also has to support a wife and three children at home.

"I certainly wouldn't be a college student without the Pell Grant," he said. "With college expenses increasing every year, it's very difficult to afford an education. If you're not able to participate in this nation's economic machine, you're going to be lost, and without programs like this, it's certainly going to be an impossibility for dreams of a college education."

The proposal, if enacted for 2006, would cost close to $2 billion, Robert Gibbs, a spokesperson from Obama's camp, told The Associated Press. The hefty cost would be covered by closing loopholes that guarantee banks and private lenders additional subsidies every year, Obama said. The bill would end the 9.5 percent guaranteed rate of return that private lenders receive in subsidies, although students pay rates closer to 3.4 percent.

"When our children dream about their future, they need to know those dreams are within their reach," the senator said. "A college education forms the foundation of the opportunity society that will keep this country strong and growing in the 21st century."

For more on Barack Obama, see "Who Is Barack Obama?"