In his State of the Union address, President Obama called for a comprehensive approach to tackling rising college cost. Here’s his blueprint:
Creating New Incentives to Promote Affordability and Quality
• The Race to the Top: College Affordability and Completion will promote change in state systems of higher education. The President is proposing a program that would spur systemic state reforms to reduce costs for students and promote success in our higher education system at public colleges. This $1 billion investment would incentivize states to:
o Revamp the structure of state financing for higher education.
o Align entry and exit standards with K-12 education and colleges to facilitate on-time completion.
o Maintain adequate levels of funding for higher education in order to address important long-term causes of cost growth at the public institutions that serve two-thirds of four-year college students.
• The First in the World competition will improve long-term productivity in higher education by investing $55 million to enable individual colleges (including Minority-Serving Institutions) and nonprofit organizations to develop, validate, or scale up innovative and effective strategies for boosting productivity and enhancing quality on campuses.
Empowering Families and Students to be Informed Consumers
President Obama is proposing new tools to provide students and families with information on higher education, presented in a comparable and easy-to-understand format:
o The Administration will create a College Scorecard for all degree-granting institutions making it easier for students and families to choose a college that is best suited to their needs, priced affordably, and consistent with their career and educational goals.
o We will also make an updated version of the ‘Financial Aid Shopping Sheet,’ announced in October, a required template for all colleges, rather than a voluntary tool, to make it easier for families to compare college financial aid packages.
o The President is also proposing to begin collecting earnings and employment information for colleges, so that students can have an even better sense of the post post-graduation outcomes they can expect.
Redoubling Federal Support to Tackle College Costs
• As highlighted by the President in his State of the Union address, we are calling on Congress to:
o Keep student loan interest rates low: This summer, the interest rates on subsidized Stafford student loans are set to double from 3.4% to 6.8% – a significant burden at a time when the economy is still fragile and students are taking on increasing amounts of debt to earn a degree. The President is asking Congress to prevent that hike from taking place for a year to keep student debt down, a proposal that will keep interest rates low for 7.4 million student loan borrowers and save the average student over a thousand dollars.
o Double the number of work-study jobs available: The President also proposes to double the number of career-related work-study opportunities so that students are able to gain valuable work-related experience while in school.
o Maintain our commitment to college affordability: Over 9 million students and families per year take advantage of the Obama Administration’s American Opportunity Tax Credit – supporting up to $10,000 over four years of college. In his State of the Union address, the President called on Congress to make this tax credit permanent and prevent it from expiring in 2012.
• The Obama Administration has raised the maximum Pell Grant award to $5,635 next year – a $905 increase since 2008.
• The Obama Administration’s “Pay as You Earn” plan will enable 1.6 million students to take advantage of a new option to cap student loan repayments at 10% of monthly income as soon as this year.