On a summer day in August 2013, Obama spoke to students at the University of Buffalo in New York about his plan to make a 4-year degree more accessible and affordable. According to Obama, the current higher education system is flawed in many ways that extend to college administrations and the states that help fund them.
Right now, states give money to colleges based on the amount of students they enroll. Obama wants to change this and have states give money to colleges that actually deserve it.
How does he plan to do this?
With an “opportunity” rating system that measures tuition costs, graduation rates, post-graduation earnings and other important factors that establish the degree of opportunity available to students at any given college. Students enrolled in colleges with higher ratings would receive larger federal grants and less costly loans.
In fact, Obama has already passed a bill that makes loans less costly. That bill, active as of December 21,2012, is called the “Pay as Your Earn” repayment plan and only requires eligible graduates to contribute a modest 10% of their income to outstanding loans.
While this is music to many students’ ears, Obama admits that there are some problems with it. For one, it needs to be accessible to more students and awareness of the bill needs to increase. Right now, there are many students who are struggling with student debt yet aren’t taking advantage of their eligibility in the program.
Another resource that many students aren’t aware of is the government’s online effort to help students and families make college affordable. The website,studentaid.ed.gov, is a clean and intuitive website that answers the following questions:
- How do I prepare for college?
- What types of aid can I get?
- Do I qualify for aid?
- How do I apply for aid?
- How do I manage my loans?
Because Obama recognizes the upsetting degree of unawareness towards available resources, he plans to launch an awareness campaign in the near future. This campaign will market available opportunities for aspiring and current college students. Within the material published in this campaign, students and families can expect to see the same stats and financial aid opportunities talked about during Obama’s presentation at the University of Buffalo. One statistic that’s likely to show up is the 250% rise in tuition over the last 3 decades. This, compared with the lousy 16% increase in income over the same time period, will make a strong case for the importance of more affordable higher education.This will resonate with students and families as well as the statistic that says unemployment rate among college graduates is one third lower than overall unemployment in the U.S.
Right now, college graduates leave school with an average debt of $26,000. This startling fact is causing aspiring students to do one of two things: 1) not go to college or 2) go to college and run the risk of suffering from unrealistic monthly loan payments. Obama’s mission is to broaden this narrow range of options with a favorable third: attend college and graduate with manageable debt. During his speech at the University of Buffalo, he mentioned ways he would achieve this.
3 main goals in Obama’s plan:
- Rate colleges on key areas – tuition cost, graduation rate, post-graduation earning and employment rate – so students and tax payers get biggest bang for buck.
- Jump start new competition between colleges that encourages lower costs
- Create easier ways for students to manage finances and afford higher education.
While points 1 and 2 refer to the rating system mentioned earlier, point 3 refers to the “Pay as Your Earn” program and colleges’ responsibility to inform students about good decision making. To help students make financially responsible decisions and manage tuition payments easier, colleges are paying fees to Higher One – a student service company – and other third party companies for their services.
Timeline for Obama’s plan, according to a New York Time’s article:
- 2015: have all colleges rated using new federal rating system
- 2018: have ratings tied to financial aid so students attending higher-rated colleges have more accessibility to better federal grants and loans
Many wheels are in motion with Obama’s new educational plan, but one question remains …
Will it succeed or get lost in the House and become political talk as usual?