In the State of the Union, President Obama made a point to talk about two critically important trends when it comes to education.
First, if you look at unemployment rates broken down by education level, you’ll notice something stark: Those without a college diploma are twice as likely to be without a job as those who earned a bachelor’s degree. For those who finished college or received more education still, the unemployment rate is just 4.1 percent—less than half the national average. And even among the employed, those who finished college make twice as much as those who failed to finish high school.
But even as a college degree has become more important than ever, the cost of that diploma has skyrocketed. For the first time, Americans owe more on their student loans than they do on their credit cards. A senior in high school today has seen the cost of full-time attendance at a public university nearly double in her lifetime.
Reforming student aid
The first step is reforming student aid. The federal government provides a lot of money to college campuses through a system that’s antiquated and in real need of an update. President Obama is proposing changing that system to help colleges focus on three principles:
- Setting responsible tuition policy: offering relatively lower net tuition prices and/or restraining tuition growth;
- Providing good value to students and families: offering quality education and training that prepares graduates to obtain employment and repay their loans; and
- Serving low-income students: enrolling and graduating relatively higher numbers of Pell-eligible students.
Colleges that do the most to provide students with good long-term value will be rewarded with additional dollars to help students attend. Those that don't act responsibly in setting tuition will receive less in terms of federal aid.
Race to the Top for higher education
We’ve seen incredible results from President Obama’s Race to the Top program, which is aimed at spurring systemic reforms that improve primary schools. It’s already helped 19 states better educate 22 million students for less than one percent of total education spending.
Now the president is hoping to create a similar initiative for higher education.
The federal government would provide a $1 billion investment to entice state governments to revamp the structure of state financing for higher education, maintain adequate levels of funding for colleges and universities, and help kids graduate on time.
Establish a First in the World competition
President Obama also wants to create a First in the World competition that would invest $55 million in individual colleges and nonprofits that are working to establish or scale up new programs that boost productivity and enhance quality on campuses. Some schools are already embracing these kinds of innovations—redesigning courses to make better use of technology, for example. But First in the World would create incentives for institutions across the country to follow their example.
Better information for families
Right now, if you’re a high school senior, or the parent of a high school senior, sifting through all the information that’s out there about college costs and financial aid is a nearly-impossible task. President Obama wants to give families new tools to help them make informed decisions about higher education. He’s proposing three new efforts:
- The President will create a College Scorecard for all degree-granting institutions to help students choose a college that offers the kind of education they hope to pursue at a price they can afford;
- The Obama administration will require colleges to put together a Financial Aid Shopping Sheet to make it easier for families to compare college financial aid packages.
- The President is also proposing to begin collecting earnings and employment information for colleges and universities, so that students can have an even better sense of the life they’ll be able to build once they graduate.
Federal support for affordable education
President Obama has already more than doubled total amount of funding available for Pell Grants and is helping 600,000 veterans go back to school with the Post-9/11 GI Bill, but there are other roles that the federal government can assume when it comes to keeping college affordable.
In the State of the Union, the President called on Congress to keep interest rates low for 7.4 million young people who take advantage of student loans (If Congress doesn't act, the interest rates for subsidized Stafford student loans will increase from 3.4 percent to 6.8 percent on July 1) , make the American Opportunity Tax Credit permanent, and double the number of work-study jobs over the next five years to better assist college students who are working their way through school.