During his speech Friday at the University of Michigan, President Barack Obama scrutinized the rising cost of attending college. Echoing sentiments from his State of the Union speech last week, Obama put publicly funded universities “on notice” to rein in tuition or face a decrease in federal funding.
The speech outlined a new blueprint for higher education that would double federal work-study programs and drastically increase the availability of federal, low-interest Perkins loans. The proposal also calls for a “Race to the Top” program — comparable to an existing plan for K-12 education — that promises financial rewards for states that keep tuition at a manageable level.
Obama’s plan also proposes a competition that would incentivize universities to balance efficiency with quality. Just as Texas universities currently compete against each other for coveted Tier-One status and its associated funding, Obama’s $55-million contest will set a standard for universities.
Besides outlining specific criteria for improvement in higher education, Obama expressed frustration with the struggle that seems unavoidable to college students across the nation: student loans. For the first time in history, total debt from student loans is greater than total credit card debt. The situation is particularly precarious because unlike credit card debt, student loans are not forgivable after declaring bankruptcy.
The mounting sticker shock of tuition creates a situation in which student loans become necessary for attendance, even at public universities. In 2003, the in-state cost of attendance at UT was only $7,974 per year. Now, it can total $12,829 — an increase of more than 60 percent over only nine years. The average UT undergraduate with loans leaves with more than $24,000 in debt, according to the University’s financial aid office. Struggling college students want to pay off loans incurred through tuition prices, but there has to be a mechanism available for them to do so.
With his proposal, Obama hopes to alleviate some of that pressure by speeding up legislation that would reduce maximum required loan payments to 10 percent of income post-graduation. By using the new Consumer Finance Protection Board, the plan will publish transparent “grades” of affordability and value at universities — an idea that has been lauded as sound by financial aid analysts.
The transparency push is essential to the effort by the Obama administration to make states more accountable for rising college costs. Texas was one of the 40 states mentioned in the speech that slashed public university funding in the last year.
The debate surrounding the state Legislature’s budget cuts prompted extreme pressure on UT and other public universities to make up the difference with tuition hikes. Proponents of extreme “efficiency,” such as the Texas Public Policy Foundation and former UT System adviser Rick O’Donnell, hijacked the conversation on higher education funding by castigating some researchers and professors as wasteful.
But, as Obama correctly acknowledged Friday, the problem is not with professors but with states that pass the buck on financing gaps by inflating tuition faster than students can be expected to keep up.
The state Legislature’s drastic cuts to higher education left universities feeling as though the only options for financial viability were to either cut key programs or to raise tuition. In December, UT President William Powers Jr. and the Tuition Policy Advisory Committee recommended the maximum allowable tuition increase of 2.6 percent for in-state students, a move that many student groups criticized as unfair.
Obama centered on this sentiment of injustice by portraying the tuition debate as a broader symptom of an economic crisis among the middle class. While speaking on the UT campus two years ago, Obama called education “the economic issue of our time.” This perspective is both alarming and accurate. While the wealthiest Americans pay a comparatively low rate of taxes, middle-class Americans face endless, increasing hurdles to higher education. Obama’s blueprint for higher education is an important step toward righting the imbalance in college affordability. Attending college shouldn’t be the American dream; it should be the American standard.