President Barack Obama called for linking financial aid to college affordability when he addressed Congress last month, but even as costs keep rising, some experts say not to expect crucial changes this year.
Reforming how financial aid is distributed – with incentives to keep tuition down – probably won’t come until after Congress tackles equally thorny changes in primary and secondary school education, known as K-12 in the U.S.
“I don’t think we’ll even get to it until 2015,” said Joni Finney, director of the Institute for Research on Higher Education at the University of Pennsylvania.
American graduates collectively owe more than $1 trillion on education loans, and college costs have soared faster than inflation over the past several decades. Congress will turn to college costs when it reauthorizes the Higher Education Act, the current version of which expires at the end of this year. But action on the legislation will likely be postponed, experts say.
And although there is wide agreement that something must be done, exactly what that will be is in dispute.
Both Parties Recognize Impact of College Costs
In his State of the Union speech on Feb. 12, Obama asked Congress to revise the Higher Education Act so affordability and value are used to determine which colleges receive certain types of financial aid.
“Taxpayers cannot continue to subsidize the soaring cost of higher education,” he said. “Colleges must do their part to keep costs down, and it’s our job to make sure they do.”
His proposal immediately drew criticism from college officials and others opposed to anything that smacks of price controls.
Sen. Marco Rubio, R-Fla., delivering his party’s response, said that although he could not have attended college without financial aid, simply spending more money on programs was not the answer. Financial aid must be available to students taking online programs and ones that award credit for work, he said.
“It’s also about strengthening and modernizing (programs),” he said.
Young People Hope for Action
The Young Invincibles, a group founded in 2009 to ensure young people’s voices are heard in national debates, has made the steep cost of higher education one of its signature issues.
According to federal data, the average inflation-adjusted annual cost of a four-year public university has risen 43 percent from $11,744 in the 2001-2002 school year to $16,789 in the 2011-2012 school year. The average costs of private institutions also rose, but by 28 percent, from $29,701 in 1991 to $37,906 in 2011.
Approximately two-thirds of all college students graduate with debt, the group says. Some 37 million borrowers have outstanding student loans.
Rory O’Sullivan, Young Invincibles’ policy and research director, said that the attention to rising college costs from both Obama and Rubio was a good sign.
“That definitely puts this issue on the agenda for Congress and makes us think that there is definitely an opportunity to get to work on some solutions to the challenges these families are facing,” he said.
Keep It Simple, Senators
Simplicity is a key change the group would like to see.
“We would like to see a much simpler, more efficient federal financial aid program with one grant, one loan with one repayment plan,” O’Sullivan said.
The Center for College Affordability and Productivity characterizes the loans, grants, tax-free savings plans and tuition tax credits available to students and their parents as a bewildering array that even the reasonably informed would have difficulty understanding. In a study released two years ago, it found that colleges often deliberately raise their prices when aid is available.
“The end result is that higher education aid does not produce an improvement in college affordability,” it said in a statement.
How to Do It
Finney, the director of the Institute for Research on Higher Education, gives Obama credit for using the bully pulpit to address rising tuitions. But rather than delve into how colleges set prices – something she says is too complex for the federal government to navigate successfully – she recommends something more direct. She would link a student’s eligibility for federal Pell grants to a college’s ability to keep its costs aligned with the rise in families’ income.
“What he could do that I was disappointed that he didn’t do is… he could say to institutions, ‘If you increase tuition beyond growth in family income, your students won’t be eligible for Pell,’” she said. “That would have been something clear, doable.”
Another idea: Offer to match states dollar-for-dollar if they put money into need-based aid, but only if their public universities do not increase tuition beyond the growth in family income. States, which shoulder the lion’s share of responsibility for financial aid, would be under pressure to comply, Finney said.
While some groups have proposed tying the financial aid institutions receive to how well students fare after graduating, the National Association of Financial Aid Advisors said it is wary of such efforts unless they account for institutions with high numbers of poor, at-risk students, said Megan McClean, the association’s policy director.
“We would just want to make sure that the metrics were fair and in line with the diverse higher education system that we have,” she said.
There have also been calls to make repaying debt a less daunting task for graduates. Representative Tom Petri, a Republican from Wisconsin, last year proposed a repayment program consisting of automatic withdrawals from borrowers’ paychecks. The withdrawals would not have exceeded 15 percent of borrowers’ income after basic living expenses.
“Students would have to repay what they borrow, but they wouldn’t face interest spiraling out of control just because of a temporary bout of unemployment,” Petri said when he proposed the legislation.
The bill died in committee.