President Obama delivers higher ed ultimatum: Lower rate of increase or lose $$$

By Jonathan McFadden
mcfaddenj@mytjnow.com

Graphic by Courtney Niskala • niskalac@mytjnow.comPublic colleges and universities that raise tuition rates too often may incur the federal government’s wrath and see their inheritance —i.e. federal money— cut off if their respective states fail to make higher education more affordable.

In January, President Barack Obama introduced a set of proposals designed to boost the affordability of higher education by lowering loan costs to students and increasing some aid programs, according to a document presented to Winthrop’s Board of Trustees earlier this month.

He also outlined four proposals state governments could adopt to trim costs, including:

Creating a Race to the Top for college affordability and completion: A $1 billion investment in a new challenge to states to spur higher education reform will reward states who are willing to drive systemic change in their higher education policies and practices, while doing more to contain their tuition and make it easier for students to earn a college degree.

A competition to model innovation and quality on college campuses: A $55 million investment n a new competition to support the public and private colleges and non-profit organizations as they work to develop and test the next breakthrough strategy that will boost higher education attainment and student outcomes.

Better data for families choose the right college for them: Creation of a College Scorecard for all degree-granting institutions, designed to provide the essential information about college costs, graduation rates and potential earnings, all in an easy-to-read format that is intended to help students and families “choose a college that is well suited to their needs, priced affordably and consistent with their career and educational goals.”

Federal support to tackle college costs:  In his State of the Union address, the President called on Congress to: keep interest rates low for 7.4 million student loan borrowers to reduce future debt, make the American Opportunity Tax Credit permanent, double the number of work-study jobs over the next 5 years and maintain support for Pell Grant maximums at the current level. 

But, some of the proposals are easier said than done.

For example, the idea that providing federal aid to students based on institutions keeping tuition low could be troubling for public colleges, which across the nation have had to hike tuition in order to compensate for vanishing state appropriations.

Since 2008, Winthrop has seen its support from the state decline consistently amid the economic recession. Although the recession is technically over, the university still receives only 9.6 percent of support from the state, whereas in 1991, it received close to 42 percent in state funds.

Student tuition and fees, which comprised a smaller portion of the university’s revenues in the early ‘90s, now account for more than half of the university’s income.

To compensate for state cutbacks, the university absorbed $3.4 million of federal stimulus money that dried out last year. In that time, Winthrop launched a Readiness Winthrop initiative — a six-step contingency plan the university adopted to deal with disappearing money.

The plan included transitioning many printed publications and materials online. It also emphasized boosting efforts to retain students, enroll more students, create new programs, mandating a new $25 safety fee all students must pay, launching the Distinction Campaign and pursuing key investments.

“Winthrop will always be willing to look at additional ways we can manage costs without reducing quality and value for students, so we look forward to hearing additional details about how the White House proposals would work if approved by Congress,” said Rebecca Masters, assistant to the president for public affairs.

The reason higher education costs rise from year to year is because it’s personnel-intensive, campuses must invest in the latest technology to help prepare students for the work world and energy costs are higher on campuses with historic properties, Masters said.

The White House hasn’t unveiled any set plan for addressing the problems the president’s addressed, leaving some higher education leaders fretting.

A Feb. 10 story in The Chronicle of Higher Education detailed the concerns of several higher education leaders, many of whom expressed a warlike ferocity against the Obama Administration’s college-affordability proposals.

David L. Warren, president of the National Association of Colleges and Universities (NAICU), is quoted saying that the college presidents he’s spoken with are ready to mobilize “shoulder to shoulder in defense of the principles of our independence.”

Warren is also quoted saying that many university presidents feel their institution’s independence is being attacked and the Department of Education is slowly transforming into the Ministry of Education.

During his State of the Union address and a speech to students at the University of Michigan in Ann Arbor, President Obama encouraged students to pressure Congress to keep the interest rate on loans from doubling. Obama also said the government needs to push colleges “to do better.”

The president has “time and time again” expressed concern that reductions in higher education state support threatens student access and family finances, and that state reductions threaten the quality of higher education students receive, Masters added.

“Few responsible institutions appropriately can avoid some tuition increase each year because the cost of things like technology, energy, campus security, library materials, building maintenance and other base costs continue to rise year to year,” she said.

Any costs not addressed by state support or tuition result in a cutback universities use to balance the budget, Masters said.

“Other simpler enterprises often face the same choice in troubled economies – to choose between increasing prices for their products or reducing what’s provided for the same cost,” Masters said.

“Expecting students to settle  for less in that degree really isn’t  an option in today’s competitive world, so to keep the quality up-to-date, tuition generally increases, especially when state support declines,” Masters added.