Public university presidents facing ever-increasing state budget cuts are raising concerns about President Barack Obama's plan to force colleges and universities to contain tuition prices or face losing federal dollars.
Illinois State University President Al Bowman says the reality is that deficits in many public schools can't be easily overcome with simple modifications. Bowman says he's happy to hear Obama call for state-level support of public universities but adds that, given the decreases in state aid, tying federal support to tuition is a product of "fuzzy math."
During a speech Friday at the University of Michigan in Ann Arbor, Obama fired a warning shot at the nation's colleges and universities, threatening to strip their federal aid if they "jack up tuition" every year and to give the money instead to schools showing restraint and value.
Obama is targeting only a small part of the financial aid picture — the $3 billion known as campus-based aid that flows through college administrators to students. He is proposing to increase that amount to $10 billion and change how it is distributed to reward schools that hold down costs and ensure that more poor students complete their education.
The bulk of the more than $140 billion in federal grants and loans goes directly to students and would not be affected.
Focus on improving clarity, transparency in aid process
As part of his broad plans to make college more affordable, Obama said Friday that he would push for financial aid "shopping sheets" that make it easier for families to comparison shop between schools.
Federal education officials say the goal is make adoption of the form mandatory for schools to maintain access to federal aid.
As it stands, officials say the financial aid award letters that schools mail out to students in the spring can be unclear or even misleading. That can result in students signing up for more debt than they realize.
For example, schools usually state an "out of pocket" cost in award letters after subtracting aid such as grants and scholarships. But some schools also subtract loans from the out-of-pocket cost. That's despite the fact that loans actually push up costs because of interest charges.
Schools also may not spell out the type of loans that's included in the aid package, even though the terms on federal and private loans can differ significantly.
To address the issue, the Department of Education and the newly created Consumer Financial Protection Bureau rolled out a model financial aid form in October and asked for the public's comments on how it could be improved. On Friday, the CFPB said feedback indicated the most important figure for students is the amount of debt they would have upon graduation.
The Department of Education was required to develop the model form as part of federal education reforms in 2008. The adoption of such a form has also been widely supported by student advocates.
The push to standardize financial aid award letters comes at a time when students are graduating with more debt than ever before. The Institute for College Access & Success estimates that two-thirds of graduates have student loans, with an average debt of about $24,000.
Congressional reaction mixed
Obama can't proceed, though, without the OK from Congress, where the reaction of Republican lawmakers ranged from muted to skeptical. Higher education leaders worried about the details and the threat of government overreach, and one dismissed it as mere election-year "political theater."
Average tuition and fees at public colleges rose 8.3 percent this year and, with room and board, now exceed $17,000 a year, according to the College Board.
Obama delivered his proposal with campaign flair, mounting a mainstream appeal to young voters and struggling families. He said higher education has become an imperative for success in America, but the cost has grown unrealistic for too many families, and the debt burden unbearable.
"We are putting colleges on notice," Obama told an arena packed with cheering students at the University of Michigan.
"You can't assume that you'll just jack up tuition every single year. If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down."
Rising tuition costs have been attributed to a variety of factors, among them a decline in state dollars and competition for the best facilities and professors. Washington's leverage to take on the rising cost of college is limited because American higher education is decentralized, with most student aid following the student. And that's not counting the legislative gridlock.
"If you were a betting person, you would not bet on it getting done, simply because the political atmosphere in Washington is so poisonous," said Terry Hartle, senior vice president at the American Council on Education, an organization that represents colleges in Washington.
Rep. John Kline, R-Minn., chairman of the House Education and Workforce Committee, said Obama put forward "interesting ideas that deserve a careful review." But Rep. Virginia Foxx, R-N.C., who leads a House panel with jurisdiction over higher education, said Obama's plan should have tackled federal regulations that she said contribute to the problem.
The top Democrat on the House education committee, Rep. George Miller, D-Calif., said Congress has bipartisan concern about the rising costs of college and thinks the president's plan will open up a conversation about the problem. Some Republicans in the past, including Rep. Buck McKeon of California, have offered proposals similar to the president's.
Others were sharper in their critique.
Sen. Lamar Alexander, R-Tenn., a former education secretary, questioned whether Obama can enforce any plan that shifts federal aid away from colleges and universities without hurting the students it is meant to help. "The federal government has no business doing this," he said.
Key stop in key electoral state
Enacted or not, Obama's plan may have the kind of popular appeal he can use in the campaign.
In Ann Arbor, he soaked up the cheers of students as he outlined the agenda from his State of the Union speech, and gave a shout out to the popular quarterback of the school's football team. And Obama used the college-aid matter to put the onus for action on Republicans, again painting them as obstructionists and himself as the fighter for the middle class.
Mary Sue Coleman, president of University of Michigan, said schools should be challenged to find ways to restrain costs, but they can't continue to make up for state cuts. Money for state universities in Michigan dropped by 15 percent in this year's state budget, and many — including the University of Michigan — raised tuition to help make up for the lost support.
Obama challenged states to be more responsible, too.
"He recognizes every part of it," Coleman said. "That's what was so powerful about the speech."
Kevin Carey, policy director at the independent Education Sector think tank, said higher education leaders will surely detest Obama's plan even if they do not say so directly.
"Instead, they'll work behind the scenes to kill it," Carey predicted.
University of Washington President Mike Young said Obama showed he did not understand how the budgets of public universities work. Young said the total cost to educate college students in Washington state, which is paid for by both tuition and state government dollars, has actually gone down because of efficiencies on campus. While universities are tightening costs, the state is cutting their subsidies and authorizing tuition increases to make up for the loss.
"They really should know better," Young said. "This really is political theater of the worst sort."
Obama also wants to create a "Race to the Top" competition in higher education similar to the one his administration used on lower grades. He wants to encourage states to make better use of higher education dollars in exchange for $1 billion in prize money. A second competition called "First in the World" would encourage innovation to boost productivity on campuses.
Obama is also pushing for the creation of more tools to help students determine which colleges and universities have the best value.
Michigan was Obama's last stop on a five-day trip to sell his State of the Union agenda in politically important states.
The White House has begun facing criticism from Republicans and daily questions from reporters about the blurring of Obama's governing and campaign-style events. Presidential spokesman Jay Carney said Obama went before Michigan students to promote a policy idea.
Said Carney: "We're not going to tell people not to applaud."
Associated Press writers Kimberly Helfing, Candace Choi, Ben Feller and Julie Pace in Washington, David Runk in Ann Arbor, Mich., and Donna Gordon Blankinship in Seattle contributed to this story.