Obama's college proposals get mixed reactions
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President Barack Obama shakes hands with students at the University of Michigan in Ann Arbor, Mich., on Friday. Mr. Obama spoke about college affordability to the crowd of more than 3,000 students, saying that he is pressuring Congress for new initiatives.
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Leaders and experts in higher education had mixed reactions to President Barack Obama's proposals to make college more affordable, applauding some while worried that others could cause more harm than good.
"What the president has done is to open the conversation," said John Cavanaugh, chancellor of the Pennsylvania State System of Higher Education. "It's very clear that we do need to have creative solutions to the cost issue."
The president outlined his plan during Tuesday's State of the Union address and reiterated some of it Friday to students at the University of Michigan. He wants schools whose tuition increases significantly exceed inflation to face cuts in federal aid, and he wants to pressure state legislatures to maintain or increase aid to higher education.
His plan targets "campus-based" aid given to colleges to distribute in areas such as Perkins loans or in work-study programs. Of the $142 billion in federal grants and loans distributed in the last school year, about $3 billion went to these programs. His plan calls for increasing that type of aid to $10 billion annually.
He proposed extending the Opportunity Tax Credit, which can amount to $10,000 over four years, beyond 2012. He would also prevent interest on subsidized Stafford loans from doubling to 6.8 percent in July. Other proposals include requiring colleges to supply standardized information so prospective students can compare cost and quality.
Molly Corbett Broad, president of the American Council on Education, issued a statement expressing concern that the proposal would "move decision-making in higher education from college campuses to Washington, D.C."
His proposals will be described in greater detail when he presents his 2013 budget to Congress on Feb. 13.
The average in-state tuition and fees at four-year public colleges last fall rose 8.3 percent and, with room and board, now exceed $17,000 a year, according to the College Board. In 2010-11 about a third of their income came from federal student aid, according to the American Council on Education.
In Pennsylvania, Mr. Cavanaugh was concerned about basing federal aid on percentage increases in tuition.
"The fundamental arithmetic problem is that the lower your tuition is in terms of sticker price, it's very easy for a percentage to look quite high when the dollars are quite small," he said. "Relying on percentages isn't going to work."
A school that knows that well is the Community College of Allegheny County, where cuts in state and county funding last year led to a 22 percent tuition hike for a typical student. Yet the dollar rise was $255 per semester to $1,433, and CCAC remains among the most affordable community colleges in Pennsylvania.
Losing federal aid for such a hike "would be a concern," said David Hoovler, spokesman for CCAC.
Despite real problems caused by state budget cuts, "it's ironic for the federal government to be telling the states that they need to invest more in student financial aid when the federal government itself has been cutting back. It's a case of do as I say, not as I do," said Mark Kantrowitz of Cranberry, publisher of finaid.org and fastweb.com, leading websites on financial aid and scholarships.
Mr. Cavanaugh said the federal government successfully pushed states into maintaining higher education funding in 2009, when stimulus dollars were tied to state college funding.
"That is not a new concept; it's been used before," he said. "It did do some good, but it ended. The question is, what happens later?"
Mr. Kantrowitz is worried that, in order to fund some proposals -- particularly the continued cut in student loan rates -- Congress will further reduce Pell grants to impoverished students. Pell grants, he said, do more to get students into college and ensure their graduation, than do the very low interest rates.
"The key concern I have is that we are in a budgetary environment where spending is being cut. If the 3.4 percent interest rate is to be extended, where does the money to pay for that come from?" he said.
If the other programs are increased, he said, "The only remaining federal student loan grant to cut is the Pell grant. But the Pell grant is the most effective student aid program."
He believes that the tax credit extension and the increase in work-study funds are likely to pass Congress because they are popular with both political parties and because the work-study can be funded by the government's income from increasing Perkins loans.
Mr. Kantrowitz is enthusiastic about the proposal for a simple scoreboard, to show prospective students the cost of any given school and comparable information about its quality. It will allow them to decide whether a more expensive school is worth the extra cost, he said.
He noted that the federal government already has a "gainful employment" assessment for for-profit schools, requiring them to show that graduates are able to pay back the loans they took out for tuition. Schools that fail the test lost federal financial aid.
"Congress could easily change that to apply it to all colleges. That would put a lot of pressure on colleges to make sure that their programs don't burden students with too much debt," he said. "President Obama isn't proposing to do that, but it's something he could do."
In a conference call with reporters Friday afternoon, Secretary of Education Arne Duncan said tuition hikes have outpaced inflation and increases in health care costs.
"Preventing college costs from spiraling out of control is a shared responsibility," he said.
Over the next five years the plan would double the number of work-study jobs "for students who agree to work their way through school," he said.
"We're going to take our time and get lots of input," Mr. Duncan said.
First Published January 28, 2012 12:00 am
