Tuesday, November 25th, 2014

The Obameter

Cut the growth of college tuition and fees in half over the next 10 years

"He set a goal to lead the world in college graduates by 2020, and cut the growth of college tuition and fees in half over the next 10 years, a goal that will save the typical student thousands of dollars a year, and proposed bringing together community colleges and businesses to train 2 million Americans for good jobs that actually exist now and are waiting to be filled."


Updates

While waiting on congress, the White House is taking steps

Making college more affordable has been a long-standing goal for the president.

During the re-election campaign, his campaign web site said he would  "cut the growth of college tuition and fees in half over the next 10 years."

Making good on this promise will be difficult.

Over the past ten years, tuition and fees have gone up fastest at public colleges and universities. According the latest survey from the College Board, after correcting for inflation, the average yearly hike at public 4-year schools was 5.2 percent and at 2-year schools, 3.9 percent. The annual rate at private 4-year schools was 2.4 percent.

Not only was the price tag rising faster at public schools, the problem had become worse compared to the previous ten years, 1992-2002, when average annual costs went up by just 3.2 percent at public 4-year schools, 1.6 percent at public 2-year schools and 2.6 percent at private schools.

One large caveat goes with these numbers: They show list price, not what people actually paid. Looking at the past 20 years, once financial aid is factored in, the picture changes a lot. The public 2-year schools actually saw a drop of 0.3 percent. Private 4-year schools went up 1.6 percent on average each year, and public 4-year schools went up 2.3 percent.

A major reason for public school tuition and fee hikes is a decline in state support. The College Board finds that average state spending on higher education relative to personal income has fallen about 40 percent since 1989. Washington has little influence over state budget writers.

That said, the federal government is far from powerless. In a speech at the State University of New York Buffalo, Obama laid out a number of steps his administration would take to bring the rate of increases down; some require congressional approval and others don't.

  • Tie financial aid to college performance: Obama would like to steer federal aid to schools that do a better job of graduating students at the lowest cost. This would reward some schools at the expense of others. To do this, he needs to change the law. The administration plans to fold this idea into the reauthorization of the Higher Education Act which expires at the end of 2013. The Senate and House have held initial hearings, but the last reauthorization took place five years after the law ran out. In the meanwhile, Obama has told the U.S. Department of Education to create a new college rating system that would be available for students and families before the 2015 college year.

  • Reward colleges that perform well in terms of graduation rates and other measures, with a special incentive for those that do well with lower and moderate income students: The president has a budget request of $1 billion to fund a competition modeled after a program aimed at high schools called Race to the Top. That request is pending but given the deep divide between Democrats and Republicans on spending and taxes, this sort of program could face long odds. For aid to low and moderate income students, the Pell Grant program is key. The administration plans to ask for a bill that would boost grant levels for schools that graduate more Pell recipients.

  • Provide seed money for innovations that provide a good education at a lower cost and publicize successful approaches: The seed money is modest; the president is proposing a $260 million fund for innovations. A portion of an existing $500 million Labor Department grant program could be spent on new approaches, but the amount is unclear. The administration already publicizes successful programs.

  • Offer waivers from regulations for schools that experiment with new cost-saving efforts: The Education Department already has authority to waive some regulations in this area.

The administration gets credit for moving on its own to establish a school performance rating system. That would be an essential ingredient should Congress ever choose to take the next step and tie federal aid to how well schools do at producing graduates at a more affordable price.  Sharing good ideas is, well, always a good idea. Whether Congress will make the legislative changes and spend the money to move the president's other policies forward is dicey, at least in the short run. For these reasons, we rate this promise In the Works.

Sources:

College Board, Trends in college pricing 2012

White House, Remarks by the President on college affordability, Aug. 22, 2013

Inside Higher Education, And so it begins, April 17, 2013

U.S. Department of Education, FY 2013 budget request - Race to the Top

New York Times, College Costs: Rising, Yet Often Exaggerated, Aug. 22, 2013

Washington Post, Wonkbook: Can Obama control the cost of college?, Aug. 23, 2013

College Board, Trends in student aid 2012