President Obama seeks to shame colleges for rising tuition costs

President Obama unveiled a new plan Thursday
designed to shame colleges and universities over rapidly escalating
tuition costs, warning the nation is facing “a crisis in terms of
college affordability and student debt.”

At a series of events across New York state, the president touted his
order to the Department of Education to create a new ranking system
that grades universities on their value to students, providing
applicants with a clearer idea of which schools give students the best
bang for their buck.

He also proposed tying federal aid to the rating system, arguing that
the federal government should not subsidize schools “who have higher
default rates than graduation rates.”

“It is time to stop subsidizing schools that are not producing good results,” Obama said.

Obama detailed the plan during a pair of speeches in Buffalo and
Syracuse, the first stops in a two-day, four-city bus tour winding
through New York and Pennsylvania that has been billed as a major part
of the White House’s summer economic push. He also held an informal
roundtable discussion about the program at a Rochester diner where he
stopped for lunch.

The Department of Education will spend the next year-and-a-half
creating and fine-tuning the “value”-based system, soliciting input from
students and educators. White House officials said the rankings would
grade universities on their ability to hold down tuition and student
loan debt, and measure costs against post-graduation employment rates. 

Obama said the rankings would empower “students and families to make
good choices,” while also incentivizing schools to hold down costs —
much as popular rating systems like the U.S. News and World Report
rankings lead universities to prioritize certain programs and goals in
order to gain an edge on competitors.

“Right now all these rankings systems rank you higher if you charge
more and let in fewer students,” Obama told a collection of high school
students in Syracuse. “But you should have a sense of who is actually
graduating students and giving you a better deal.”

The president will also ask Congress to tie federal grants and
financial aid to the rankings. The idea, Obama said, is to reward
schools that keep costs down and punish those that jack up tuition
rates.

“These reforms won’t be popular with everyone, especially those who
are making out just fine under the current system,” Obama said.

But, he added, “Higher education cannot be a luxury. It’s an economic imperative. Every American family should be able to get it.”

Obama noted that over the past three decades, the average tuition at
public four-year colleges has risen more than 250 percent, while a
typical family’s income only increased 15 percent.

“At some point, families are having to make up some of the difference
or students are having to make up some of the difference with debt,”
Obama said.

Federal student debt topped $1 trillion in July, according to the
Consumer Financial Protection Bureau, while private banks have issued
another $200 billion in student loans. Aside from mortgages, student
loans are now the most widely held debt in the country, according to the
Federal Reserve.

The president said the new ratings system would take into account how
schools are serving low-income students eligible for Pell grants to
incentivize universities to admit and support those who could benefit
the most from a college degree.

“We should rate colleges based on opportunity: Are they helping students from all kinds of backgrounds to succeed?” Obama asked.

The president also called for a new federal program — priced, according
to White House officials, at $1 billion — that would be used to
encourage universities to create programs that would help students
graduate with less debt. Obama cited public universities that allow
students to take classes at their own pace, complete introductory
courses at community colleges, and offer rigorous online degrees as
examples of successful experiments that could be funded under a higher
education “Race to the Top.”

“It’s time for more colleges to step up with even better ways to do it,” Obama said.

And Obama called for the expansion of a program that caps student loan
payments to a borrower’s income. Under the plan, those with federal
student loans would not be asked to put more than 10 percent of their
income toward student loan debt.

Republicans on Thursday
dismissed the president’s address, with Republican National Committee
spokeswoman Kirsten Kukowski blasting the president for “giving
another speech with no record to show for it.”

“Obama’s record with youth is wrought with failures from college costs
to student loan debt, and his economy has made it difficult for young
Americans to prosper,” she said.

House Education Committee Chairman John Kline (R-Minn.) said he was
pleased by the president’s call for more innovation in higher education,
but was wary of the rankings.

“I remain concerned that imposing an arbitrary college ranking system
could curtail the very innovation we hope to encourage — and even lead
to federal price controls. As always, the devil is in the details, and I
look forward to examining the president’s proposal further as part of
the committee’s ongoing efforts to reauthorize the Higher Education Act
and help improve college affordability and access,” he said in a
statement.

The president’s economic push comes ahead of looming battles over the
federal budget and debt ceiling upon Congress’s return from summer
recess.

In his remarks, Obama chastised “a certain faction of my good friends in
the other party who have been talking about not paying the bills they’ve
already run up.”

“We can’t afford the usual Washington circus of distractions and political posturing,” he said.

And while education was the primary thrust of the first day of
his bus tour, Obama also managed a detour to Seneca Falls, the New York
town that has become synonymous with the women’s suffrage movement.

While there, Obama visited the national park that hosts the site of
the first women’s rights convention, and bought his daughters copies of
the Declaration of Sentiments, a pivotal suffrage document modeled on
the Declaration of Independence. He also donated a signed copy of the
Lilly Ledbetter Fair Pay Act to the museum there.

— This story was last updated at 7:11 p.m.