After President Barack Obama called the cost of college “the most daunting challenge” high school graduates currently face during Tuesday’s State of the Union address, he issued a challenge Friday to American universities: keep tuition down or risk losing funding.
In a speech delivered at the University of Michigan Friday, Obama outlined proposals to increase campus-based aid to colleges to $10 billion annually and increase or decrease funding to schools based on their affordability and value to students.
Obama’s “Blueprint for Keeping College Affordable and Within Reach for All Americans” — originally mentioned in Tuesday’s address and posted as an online fact sheet Friday — proposes to shift federal aid away from schools with rising tuition and move it toward “those acting responsibly.” The plan defines “responsible” colleges as those that restrain tuition increases, offer a “good value to students” and serve low-income students.
“We are putting colleges on notice… you can’t assume that you’ll just jack up tuition every single year,” Obama said in the speech. “If you can’t stop tuition from going up, then the funding you get from taxpayers each year will go down.”
The UC Office of the President released a statement Friday supporting the proposal to reward colleges that graduate more low-income students.
“The (UC) already has tuition that is highly redistributive: One third of every tuition dollar goes to financial aid, and more than half of our students pay no tuition,” the statement reads.
But if California voters do not approve Gov. Jerry Brown’s proposed tax increases in November, the UC will receive a $200 million cut, which could spur tuition hikes.
Dr. Muriel Howard, president of the American Association of State Colleges and Universities, expressed concern over Obama’s proposal in a statement.
“Public institutions in 40 states do not have complete control of their pricing,” she said in the statement. “Harming students at these institutions because of decisions made beyond the control of their college or university is an obstacle to keeping the American promise.”
Obama also proposed a “Race to the Top” program which would reward states that engage in higher education reform and a “First in the World” competition which would support public and private colleges and nonprofit organizations working on reform.
Additional proposals included increasing work-study jobs, creating a “college scorecard” which would provide families with college information and extending the American Opportunity Tax Credit, which provides $2,500 maximum per year to low-income college students.
Obama also opposed the planned increase of interest rates for subsidized federal Stafford student loans from 3.4 percent to 6.8 percent this summer.
Rich Williams, higher education advocate for the U.S. Public Interest Research Group, said preventing increased interest rates on student loans, extending the tax credit and increasing work-study jobs could play a central role in helping students reduce debt.
“Student debt has been skyrocketing,” he said. “More students are borrowing more, and that comes with serious consequences. Hopefully with President Obama drawing the line in the sand on this, it will help build momentum in Congress to see it passed.”
Jamie Applegate covers higher education.