Obama Announces New Higher Education Initiatives

As the race for the White House intensifies, I have no doubt that we’ll see a host of new plans and ideas emerge on how to tackle higher education. That’s why I wasn’t that surprised by Obama’s announcement on new initiatives in his State of the Union address. Regardless of the reasons why these are being revealed now – and there are many people who link these to Obama’s need to appeal to a key portion of the electorate – we surely need to encourage and applaud any moves to improve the plight of students who face very high levels of debt. 

So what did Obama announce in his address? Well, I guess to me it’s not so much what he announced that’s important, but the approach he is taking in his new initiatives. He is basically trying to impose a new direction in higher education by linking the federal funds that campuses get to the tuition policies that they implement. So for instance, a $1 billion “Race to the Top” competition for funds is conditional on states maintaining adequate funding for higher education. 

Similarly, a $55 million grant contest called “First in the World” competition is aimed at institutions that devise and implement promising strategies in areas such as technology.

More crucially, Mr Obama is threatening universities and colleges with withdrawal of federal student financial aid if they are not able to graduate higher numbers of students – especially low-income students – and keep cost of tuition down. He said: "Let me put colleges and universities on notice: If you can't stop tuition from going up, the funding you get from taxpayers will go down". 

In view of the student debt crisis we face in the United States, this is a move that many people will be pleased about. Still, most of the initiatives announced will require congressional approval, so let’s not take it as read for now…

Finally, I wanted to draw your attention to the one initiative that I think will have the most notable impact in the short term for those who are facing large college loan repayments. The official White House statement reads: “This summer, the interest rates on subsidized Stafford student loans are set to double from 3.4% to 6.8% – a significant burden at a time when the economy is still fragile and students are taking on increasing amounts of debt to earn a degree. The President is asking Congress to prevent that hike from taking place for a year to keep student debt down, a proposal that will keep interest rates low for 7.4 million student loan borrowers and save the average student over a thousand dollars.” This is good news for student, and something that I hope will be implemented, but I still have one question: what happens after this one year is over? This hike in interest rates from 3.4% to 6.8% is eye watering and while a year’s grace is very welcome, it still doesn’t resolve the overall long-term issue of student debt.

What do you all think? I would love to hear your views.

NOTE:
Those of you who want to read more about these initiatives can download a factsheet about “President Obama’s Blueprint for Keeping College Affordable and Within Reach for All Americans” by clicking here.