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Obama To Universities: Keep Tuition Down Or Lose Fed Dollars

AP | 2/20/2012, 5:01 p.m.

WASHINGTON -- Access to college has been the driving force in federal higher education policy for decades. But the Obama administration is pushing a fundamental agenda shift that aggressively brings a new question into the debate: What are people getting for their money?

Students with loans are graduating on average with more than $25,000 in debt. The federal government pours $140 billion annually into federal grants and loans. Unemployment remains high, yet there are projected shortages in many industries with some high-tech companies already complaining about a lack of highly trained workers.

Meanwhile, literacy among college students has declined in the last decade, according to a commission convened during the George W. Bush administration that said American higher education has become "increasingly risk-averse, at times self-satisfied, and unduly expensive." About 40 percent of college students at four-year schools aren't graduating, and in two-year programs, only about 40 percent of students graduate or transfer, according to the policy and analysis group College Measures.

College drop-outs are expensive, and not just for the individual. About a fifth of full-time students who enroll at a community college do not return for a second year, costing taxpayers hundreds of millions of dollars annually, according to an analysis released last fall by the American Institutes for Research.

There's been a growing debate over whether post-secondary schools should be more transparent about the cost of an education and the success of graduates. President Barack Obama has weighed in with a strong "yes."

During his State of the Union address, Obama put the higher education on notice: "If you can't stop tuition from going up, the funding you get from taxpayers will go down," he said. "Higher education can't be a luxury- it's an economic imperative that every family in America should be able to afford."

He wants to slightly reduce federal aid for schools that don't control tuition costs and shift it to those that do. He also has proposed an $8 billion program to train community college students for high-growth industries that would provide financial incentives to programs that ensured their trainees find work. Both proposals need congressional approval.

At the same time, the administration is developing both a "scorecard" for use in comparing school statistics such as graduation rates as well as a "shopping sheet" students would receive from schools they applied to with estimates of how much debt they might graduate with and estimated future payments on student loans.

American's higher education system has long been the backbone of much of the nation's success, and there's no doubt that a college degree is valuable. It's now projected that students with a bachelor's degree will earn a million more dollars over their lifetime than students with only a high school diploma, Education Secretary Arne Duncan says.

But Obama's statement to Congress jolted the higher education establishment, which believes that college isn't just to create foot soldiers for industry and that the use of measured outcomes would hurt the humanities, meaning fewer students will turn to Shakespeare and instead study engineering, said Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University. The community has already been reeling over an earlier administration decision to require career college programs - many of which are at for-profit institutions - to better prepare students for "gainful employment" or risk losing federal aid.