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White House fact sheet on proposals to control college costs

The White House today released this outline of President Obama's plan to control the spiraling costs of a college education.


President’s Plan to Make
College More Affordable: A Better Bargain for Middle Class Families in New

THE WHITE HOUSE  Office of the Press Secretary


August 22,

SHEET on the President’s Plan to Make College More Affordable: A Better Bargain
for Middle Class Families in New

 A higher education is the single most important investment students can make in
their own futures. At the same time, it has never been more expensive. That’s
why since taking office, President Obama has made historic investments in
college affordability, increasing the maximum Pell Grant award for working and
middle class families by more than $900, creating the American Opportunity Tax
Credit, and enacting effective student loan reforms eliminating bank subsidies
and making college more affordable. 


However, despite these
measures, college tuition keeps rising. The average tuition at a public
four-year college has increased by more than 250 percent over the past three
decades, while incomes for typical families grew by only 16 percent, according
to data from the College Board.  In New York, about 1,475,900 undergraduate
students are enrolled in higher education institutions across the state. For the
2011-12 school year, the average cost of attendance for in-state undergraduate
students at public colleges and universities living on campus reached $20,443 in
New York. And
according to estimates from The Institute for College Access and Success,
graduating seniors who borrowed to attend college in New York left school with
an average of $25,851 in debt.


Declining state funding has
forced students to shoulder a bigger proportion of college costs; tuition has
almost doubled as a share of public college revenues over the past 25 years from
25 percent to 47 percent.  While a college education remains a worthwhile
investment overall, the average borrower now graduates with over $26,000 in
debt. Only 58 percent of full-time students who began college in 2004 earned a
four-year degree within six years. Loan default rates are rising, and too many
young adults are burdened with debt as they seek to start a family, buy a home,
launch a business, or save for

Today, President Obama
outlined an ambitious new agenda to combat rising college costs and make college
affordable for American families. His plan will measure college performance
through a new ratings system so students and families have the information to
select schools that provide the best value. And after this ratings system is
well established, Congress can tie federal student aid to college performance so
that students maximize their federal aid at institutions providing the best
value. The President’s plan will also take down barriers that stand in the way
of competition and innovation particularly in the use of new technology, and
shine a light on the most cutting-edge college practices for providing high
value at low costs.  And to help student borrowers struggling with their
existing debt, the President is committed to ensuring that all borrowers who
need it can have access to the Pay As You Earn plan that caps loan payments at
10 percent of income, and is directing the Department of Education to ramp up
its efforts to reach out to students struggling with their loans to make sure
they know and understand all their repayment options. 


A Better
Bargain for the Middle Class: Making College More


for Performance

  • ·        
    Tie financial aid to
    college performance, starting with publishing new college ratings before the
    2015 school year.
  • ·        
    Challenge states to fund
    public colleges based on performance.
  • ·        
    Hold students and colleges
    receiving student aid responsible for making progress toward a


Innovation and Competition

  • ·        
    Challenge colleges to offer
    students a greater range of affordable, high-quality options than they do
  • ·        
    Give consumers clear,
    transparent information on college performance to help them make the decisions
    that work best for them.
  • ·        
    Encourage innovation by
    stripping away unnecessary regulations.


that Student Debt Remains Affordable

  • ·        
    Help ensure borrowers can
    afford their federal student loan debt by allowing all borrowers to cap their
    payments at 10 percent of their monthly
  • ·        
    Reach out to struggling
    borrowers to ensure that they are aware of the flexible options available to
    help them to repay their debt.




and Students for


The federal government
provides over $150 billion each year in student financial aid – of that total,
higher education institutions in New York will receive more than $9,744,000,000
in federal student aid funding (including Pell Grants, undergraduate federal
student loans, graduate and parent federal student loans, and campus-based aid)
in the 2013-14 school year. Meanwhile, all fifty states collectively invest over
$70 billion in public colleges and universities. The vast majority of these
resources nationwide are allocated among colleges based on the number of
students who enroll, not the number who earn degrees or what they learn.
President Obama’s plan will connect student aid to outcomes, which will in turn
drive a better, more affordable education for all


  • ·        
    Financial Aid to College Value: 
    To identify colleges for
    providing the best value and encourage all colleges to improve, President Obama
    is directing the Department of Education to develop and publish a new college
    ratings system that would be available for students and families before the 2015
    college year. In the upcoming reauthorization of the Higher Education Act, the
    President will seek legislation allocating financial aid based upon these
    college ratings by 2018, once the ratings system is well established. Students
    can continue to choose whichever college they want, but taxpayer dollars will be
    steered toward high-performing colleges that provide the best value. 


  • o      
    New College Ratings before
    . Before the 2015 school
    year, the Department of Education will develop a new ratings system to help
    students compare the value offered by colleges and encourage colleges to
    improve. These ratings will compare colleges with similar missions and identify
    colleges that do the most to help students from disadvantaged backgrounds as
    well as colleges that are improving their performance. The results will be
    published on the College Scorecard. The Department will develop these ratings
    through public hearings around the country to gather the input of students and
    parents, state leaders, college presidents, and others with ideas on how to
    publish excellent ratings that put a fundamental premium on measuring value and
    ensure that access for those with economic or other disadvantages are
    encouraged, not discouraged.  The ratings will be based upon such measures
    • §        
      Access, such as percentage
      of students receiving Pell grants;
    • §        
      Affordability, such as
      average tuition, scholarships, and loan debt;
    • §        
      Outcomes, such as
      graduation and transfer rates, graduate earnings, and advanced degrees of
      college graduates.


  • o      
    Base Student Aid on College
    Value by 2018
    . Over the next four years,
    the Department of Education will refine these measurements, while colleges have
    an opportunity to improve their performance and ratings. The Administration will
    seek legislation using this new rating system to transform the way federal aid
    is awarded to colleges once the ratings are well developed. Students attending
    high-performing colleges could receive larger Pell Grants and more affordable
    student loans.


  • ·        
    States with a Race to the Top for Higher Education that Has Higher Value and
    Lower Costs:
    The President requested $1
    billion in Race to the Top funding to spur state higher education reforms and
    reshape the federal-state partnership by ensuring that states maintain funding
    for public higher education. About three-quarters of college students attend a
    community college or public university, and declining state funding has been the
    biggest reason for rising tuition at public institutions. The Race to the Top
    competition will have a special focus on promoting paying for value as opposed
    to enrollment or just seat time. States typically fund colleges based on
    enrollment rather than on their success at graduating students or other measures
    of the value they offer. There are notable exceptions, like Tennessee, Indiana and
    Ohio, which
    fund colleges based on performance. To build on their examples, the President’s
    plan would also encourage states to provide accelerated learning opportunities,
    smooth the transition from high school to college and between two- and four-year
    colleges, and strengthen collaboration between high schools and colleges. 


  • ·        
    Colleges for Results with a Pell Bonus and Higher Accountability:
    To encourage colleges to
    enroll and graduate low- and moderate-income students, the President will
    propose legislation to give colleges a bonus based upon the number of Pell
    students they graduate. And the Administration will prevent the waste of Pell
    dollars by requiring colleges with high dropout rates to disburse student aid
    over the course of the semester as students face expenses, rather than in a lump
    sum at the beginning of the semester, so students who drop out do not receive
    Pell Grants for time they are not in school. 


  • ·        
    Student Responsibility for Academic Performance:
    There are projected to be
    about 509,900 Pell Grant recipients and 480,500 undergraduate federal student
    loan borrowers in New
    York in the 2013-14 school year. To ensure students are
    making progress toward their degrees, the President will also propose
    legislation strengthening academic progress requirements of student aid
    programs, such as requiring students to complete a certain percentage of their
    classes before receiving continued funding.  These changes would encourage
    students to complete their studies on time, thereby reducing their debt, and
    will be designed to ensure that disadvantaged students have every opportunity to


Innovation and


rising tide of innovation has the potential to shake up the higher education
landscape.  Promising approaches include three-year accelerated degrees, Massive
Open Online Courses (MOOCs), and “flipped” or “hybrid” classrooms where students
watch lectures at home and online and faculty challenge them to solve problems
and deepen their knowledge in class. Some of these approaches are still being
developed, and too few students are seeing their benefits. The federal
government can act as a catalyst for innovation, spurring innovation in a way
that drives down costs while preserving quality. 


To promote innovation and
competition in the higher education marketplace, the President’s plan will
publish better information on how colleges are performing, help demonstrate that
new approaches can improve learning and reduce costs, and offer colleges
regulatory flexibility to innovate.  And the President is challenging colleges
and other higher education leaders to adopt one or more of these promising
practices that we know offer breakthroughs on cost, quality, or both – or create
something better themselves: 


  • ·        
    Award Credits Based on
    Learning, not Seat Time.
    Western Governors University is a
    competency-based online university serving more than 20,000 students with
    relatively low costs— about $6,000 per year for most degrees with an average
    time to a bachelor’s degree of only 30 months. A number of other institutions
    have also established competency-based programs, including Southern New
    Hampshire University and the University of Wisconsin


  • ·        
    Use Technology to
    Redesign Courses.
    Redesigned courses that integrate online
    platforms (like MOOCs) or blend in-person and online experiences can accelerate
    the pace of student learning. The National Center for Academic Transformation has
    shown the effectiveness of the thoughtful use of technology across a wide range
    of academic disciplines, improving learning outcomes for students while reducing
    costs by nearly 40 percent on average. Carnegie Mellon University’s Open Learning Initiative has
    developed a hybrid statistics course used at six public universities, and its
    students performed as well as their peers in a traditional course in only 75
    percent of the time. Arizona State
    University’s interactive
    algebra lessons helped students perform 10 percent better, despite meeting half
    as often, and at a lower cost.  The University of Maryland redesigned an introductory
    psychology course, reducing costs by 70 percent while raising pass rates. 
    New York’s
    Open SUNY initiative brings together every online program offered system-wide,
    helping students complete more quickly.


  • ·        
    Use Technology for
    Student Services. 
    Online learning communities and e-advising
    tools encourage persistence and alert instructors when additional help is
    needed. Technology is enabling students from across campuses and across the
    world to collaborate through online study groups and in-person meet-ups. 
    MOOC-provider Coursera has online forums in which the median response time for
    questions posed by students is 22 minutes. To help students choose the courses
    that will allow them to earn a degree as quickly as possible, Austin Peay State
    University has developed the “Degree Compass” system that draws on the past
    performance of students in thousands of classes to guide a student through a
    course, in a similar manner to the way Netflix or Pandora draw on users’ past
    experience to guide movie or music choices. 


  • ·        
    Recognize Prior Learning
    and Promote Dual Enrollment.
    Colleges can also award credit for prior
    learning experiences, similar to current Administration efforts to recognize the
    skills of returning veterans.  Dual-enrollment opportunities let high school
    students earn credits before arriving at college, which can save them money by
    accelerating their time to degree.


To help colleges innovate
and improve quality and outcomes, the Administration


  • ·        
    Empower Students with
    New college ratings will help students
    compare the value offered by different colleges.  The Department of Education
    will enlist entrepreneurs and technology leaders with a “Datapalooza” to
    catalyze new private-sector tools, services, and apps to help students evaluate
    and select colleges. The effort will be complemented by earnings information by
    college that will be released for the first time on Administration’s College
    Scorecard this fall.


  • ·        
    Seed Innovation and
    Measure What Works: 
    To demonstrate what works, President Obama has proposed a new $260
    million First in the World fund to test and evaluate innovative approaches to
    higher education that yield dramatically better outcomes, and to develop new
    ways for colleges to demonstrate that they are helping their students learn. In
    addition, the Department of Labor is planning to grant an additional $500
    million to community colleges and eligible four-year colleges and universities
    next year.  A portion of these resources will be used to promote accelerated
    degree paths and credentials that would drive more high-quality and affordable
    options for adult workers and students. Through these efforts, the
    Administration will work with business and philanthropy to support industry
    partnerships to enrich student learning with valuable job exploration and


  • ·        
    Reduce Regulatory
    The Department will use its authority to
    issue regulatory waivers for “experimental sites” that promote high-quality,
    low-cost innovations in higher education, such as making it possible for
    students to get financial aid based on how much they learn, rather than the
    amount of time they spend in class. Pilot opportunities could include enabling
    colleges to offer Pell grants to high school students taking college courses,
    allowing federal financial aid to be used to pay test fees when students seek
    academic credit for prior learning, and combining traditional and
    competency-based courses into a single program of study.  The Department will
    also support efforts to remove state regulatory barriers to distance education.


Finally, the President will
challenge leaders in states, philanthropy, and the private sector to make their
own commitments to improve college value while reducing costs.  For example,
states can redesign the transition to postsecondary education and commit to
strategies to improve student learning and enhance student advising, such as
hybrid learning pilots, adaptive learning platforms, and digital tutors. Philanthropists can create initiatives,
pilots and prizes for colleges that advance competency-based education,
accelerated degrees, and the integration of new technologies into on-campus
teaching and learning.  Investors and entrepreneurs can directly support and
develop new technologies and innovations that accelerate student learning while
evaluating the effectiveness of different approaches.  And employers and industry groups can
collaborate with postsecondary institutions and new providers to develop
high-quality, low-cost degrees in growing sectors of the economy, offer
work-based learning experiences to students, and hire graduates who demonstrate
the knowledge and skills employers


Student Debt Is


In New York, about 2,434,800
student loan borrowers owe an outstanding total debt of more than
$56,263,000,000. While bringing down costs for current and future college
students, President Obama will also help students with existing debt to manage
their obligations.


Income-driven repayment
plans allow borrowers to take responsibility for their federal student loan debt
with more flexible repayment terms, while helping professionals like teachers
and nurses who take on critical jobs in our society that require significant
education but may result in modest salaries. These plans allow students to fully
repay their student debt on a sliding scale that adjusts monthly payments based
on changing income and growing families.  Nearly two-thirds of people that
currently participate in the income-driven repayment plans make less than
$60,000 a year. Currently, about 2 million of 37 million federal student loan
borrowers are benefitting from income-driven


  • ·        
    Make All
    Borrowers Eligible for Pay As You Earn:

    To make sure that students and families have an easy-to-understand insurance
    policy against unmanageable debt now and in the future, the President has
    proposed allowing all student borrowers to cap their federal student loan
    payments at 10 percent of their monthly income. Currently, students who first
    borrowed before 2008 or have not borrowed since 2011 are not eligible for the
    President’s Pay As You Earn plan. In addition, the Administration will work with
    Congress to ensure that the benefits are targeted to the neediest


  • ·        
    an Enrollment Campaign for Pay As You Earn:
    Beginning this fall, the
    Department of Education will contact borrowers who have fallen behind on their
    student loan payments, undergraduate borrowers with higher-than-average debts,
    and borrowers in deferment or forbearance because of financial hardship or
    unemployment to ensure they have the information they need to choose the right
    repayment option for them.  Starting in 2014, the Department of Education and
    the Department of Treasury will work to help borrowers learn about and enroll in
    Pay As You Earn and Income-Based Repayment plans when they file their taxes.  
    And to assist guidance counselors and other advisers who guide students through
    the process of selecting and financing their higher education, the
    Administration will launch a “one-stop shop” that will include important
    resources for choosing among various income-driven repayment options.   


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