In President Obama’s most recent State of the Union address I was a little concerned about something he said when speaking about higher education, tuition and financial aid.
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Just like most people interested in the politics of education, my ears perked up when President Obama said:
“When kids do graduate, the most daunting challenge can be the cost of college. At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July.
Extend the tuition tax credit we started that saves millions of middle-class families thousands of dollars, and give more young people the chance to earn their way through college by doubling the number of work-study jobs in the next five years.
Of course, it’s not enough for us to increase student aid. We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money. States also need to do their part, by making higher education a higher priority in their budgets. And colleges and universities have to do their part by working to keep costs down.”
That sounds great! Cheaper higher education for all! …
However like many that actually work in the higher education I am terribly skeptical of this proposal. Not because I don’t like the idea, but I’m fearful of what it could mean for educational policy.
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What Obama actually said:
Student Loans are a Big Deal
“At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July”
Better yet, debt is a big deal. I have student loans and I know many former students do as well, this of course has become the norm because of the immense amount of money that it costs to study in a higher education institution. This isn’t a new thing either, student loan debt surpassed credit card debt in the U.S. back in 2010, but the gap hasn’t stayed constant, but rather it has increased.
The statistics Obama uses in his SOTU are in my opinion conservative. Most reports I’ve seen believe Student Loan debt to surpass $1 Trillion by the beginning of 2012.
The world economy runs on debt, so telling major financial institutions that we won’t be using loans as often makes large institutions such as Wachovia a little ancy. You can see why this small sentence is fearful to those who follow the Trickle-down theory way of economics rather than Obama’s consistent Keynesian economic outlook. This is one example how even trickle-down economics isn’t actively helping our education institutions. The richer are getting richer (Harvard) and the poorer need more federal aid, state aid and tuition increases.
Most People need help paying Education
“Extend the tuition tax credit we started that saves millions of middle-class families thousands of dollars, and give more young people the chance to earn their way through college by doubling the number of work-study jobs in the next five years.”
College is expensive. The Average cost of college has gone from $26,167 in 2000/01 to $31,876 in 2009/10. That’s a 21.82% increase over a ten year period. Even though this keeps in line with inflation, the wages and median income of U.S. families does not keep up with inflation.
in 2007/08 (the latest numbers I could find) 65.6% of students used some form of financial aid to pay for their education
51.7% used some form of grants, and 38.5% used some form of loans.
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We can surmise that the majority of students that are studying don’t have enough money to pay for school without using grants or loans. This means a lot. The diversity of types of students has increased over the past decade, which has added to the numbers, but overall the idea that college is expensive and people need help paying for school shines through.
Federal, State Funding to Education
“We can’t just keep subsidizing skyrocketing tuition; we’ll run out of money. States also need to do their part, by making higher education a higher priority in their budgets. And colleges and universities have to do their part by working to keep costs down.”
Even though this statement seems like Obama wants to cut Federal funding, he actually wants to increase Pell Grant funding among other things such as extending tax cuts and credits, which will be good for student’s families and others, but just like most people are asking about a lot of policies Obama is introducing: Who/What is going to pay for this?
Currently states governments and the federal government give money to state schools. However this number has slowly decreased over the years due to states cutting budgets and overall the U.S. government not giving as much money to higher education as it did at one time (by percentage). According to some of the major plans that Obama is wanting to enact this money would become even less and colleges would essentially be competing for this money through ranking systems and other items Obama is calling the College Scorecard
I don’t believe Obama believes in cutting federal money to universities, that would be Ron Paul’s America more than it would be Obama’s, however the battle for federal funding and state funding will become a larger topic in the coming years within Obama’s plan. Government rankings scare me. A scorecard is even worse. I can’t see colleges and universities being too excited to have a list of items to be graded on by the government.
Take-away:
Personal feelings aside, I do believe that cheaper education is a good thing. I also believe that education comes in all shapes and sizes and many people are getting liberal arts degrees and working as a waiter. There is need for major education reforms in the U.S. Some of those are at the Higher Education Level, but many start at the elementary and secondary levels.
The reforms Obama plans in my mind are the financial and policy driven ideological equivalent of ‘having your cake and eating it too.’ When your language tends to make me believe you’re going to make major cuts, and then your policy introduces spending and increases student aid, it’s tough for me to know exactly which Obama is going to eventually enact policy. (hence, why I am unsure)
It will never be perfect, but if we can make it more affordable then we will be better off as an educated society. Educated in how to create, innovate and make a U.S. that not only would my children be able to live in, but one my forefathers would be proud of.
Click here to watch the entire SOTU.
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Sources/More Reading:
White House Fact Sheet on Education Reforms
Natl Center for Education Statistics Cost of Tuition over time
Natl Center for Education Statistics Loan, Grant Statistics
Good.is Loan Statistics $1 Trillion
Fox News’ Fact Check State of the Union
FactCheck.org State of the Union
FactCheck.org GOP Response to SOTU
Politifact Fact Check the SOTU
WhiteHouse.gov Transcript of SOTU
