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Obama proposes link between college aid and affordability

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January 28, 2012|By Julianna Goldman and Kate Andersen Brower

President Barack Obama spoke at the University of Michigan's Al Glick… (Haraz N. Ghanbari/AP )

Saying “we just can’t keep on subsidizing skyrocketing tuition,” President Barack Obama proposed to have the government, for the first time, link federal aid to a college’s ability to control tuition costs and maintain education quality.

“We are putting colleges on notice -- you can’t assume that you’ll just jack up tuition every single year,” Obama said today at the University of Michigan in Ann Arbor. “If you can’t stop tuition from going up, then the funding you get from taxpayers every year will go down.”

For institutions that control costs, the administration is proposing to increase campus-based aid to about $10 billion a year, up from $1 billion. The bulk of the money, about $8 billion, would be devoted to Perkins loans for students, with other aid set aside for work-study grants and Supplemental Educational Opportunity Grants.

Obama said higher education today is “an economic imperative” instead of a luxury. “College is the single most important investment that you can make in your future,” he said.

The administration’s proposal calls for $1 billion to entice states to help keep costs down at public colleges while encouraging an overhaul of state programs that help finance education.

Obama is also proposing $55 million for individual colleges as an inducement to improve education quality.

Congressional Approval Needed

Congress would be required to approve the changes, which will be spelled out in greater detail when the president submits his fiscal 2013 budget to lawmakers on Feb. 13.

In his Jan. 24 State of the Union address, the president said that states need to make “higher education a higher priority in their budgets.”

As part of the package, the administration is urging Congress to block an increase in government-subsidized Stafford loan interest rates that would affect 7.4 million borrowers. Rates are set to double this summer to 6.8 percent.

Obama’s proposal would double work-study jobs on institution campuses, and he is urging Congress to extend beyond 2012 the Opportunity Tax Credit program, which offers as much as much as $10,000 in credits for four years of college.

In 2008 Obama won Michigan by 16 percentage points. Tuition and fees at the University of Michigan rose 6.7 percent in the 2011 school year after a $47.5 million decrease in state funding.

Lower State Investment

The president said he wants the US to have the highest number of college graduates by 2020, though the weak economy has lowered state funding for education and stymied his calls for more investment in education.