Obama Presses Colleges for More Affordability

During last week’s State of the Union address, President Obama highlighted the importance of restraining the growth of college costs for middle- and low-income students and families. Later that week, before a boisterous crowd at the University of Michigan, he took his college affordability pitch on the road and offered some details. Specifically, the president proposed linking eligibility for the billions of federal dollars spent on campus-based aid to the schools’ ability to provide better value to students.

College costs are spiraling out of control. While most families struggle to keep up, low-income families, not surprisingly, are the hardest hit. Currently, to send just one child to a four-year university for one academic year, low-income families must contribute an amount equivalent to 72 percent of their annual household income. In contrast, families with annual earnings of $100,000 are required to contribute only 21 percent.

Why is this happening? First, the buying power of Pell grants — the federal government’s primary program to help low-income students afford college — has diminished dramatically over the past three decades. Second, states have been cutting aid to institutions dramatically. And finally, institutions are steadily shifting their aid resources away from students who couldn’t go to school without financial help, to those who don’t really need it. Low- and moderate-income students feel the pinch at each level — federal, state, and institutional.

Obama’s plan would address several facets of affordability. It calls for an increase in campus-based funding to $10 billion annually. The proposal also includes a $1 billion competitive grant program — a higher education version of the K-12-focused Race to the Top — to incentivize states to think hard about how to contain skyrocketing tuition and fees. In a separate proposal, the president outlined a $55 million First in the World competition, designed to reward institutions that successfully rein in their costs.

To help students and families make informed decisions about college, the president also proposed a “college scorecard.” Each scorecard would provide important school data such as graduation rates, net price, postgraduate earning potential, and job-placement rates. More details are needed to determine the merits of this proposal, especially with respect to how well it advances equity. But if done well, such a tool could help families make informed decisions about how to get the most educational value for their money.

An educated populace is integral to our national goals of reclaiming our position as the most college-educated nation by 2020 and producing world-class workers ready to lead the global economy. We won’t reach these goals if our students can’t afford a high-quality college education. Federal, state, and institutional commitment to making college more affordable is a necessary step in the right direction.

—Jim Davy