So far, the outlines of the college-affordability proposals first mentioned in President Obama’s State of the Union address last week have raised as many questions as they have answered.
“We still don’t have all the details, right?” said Cynthia A. Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities. “The devil’s in the details.”
That sentiment was repeated by a number of college administrators and financial-aid experts, many of whom expressed surprise about at least some aspects of the plan.
The president’s proposals, which would expand campus-based federal aid and link it to college affordability, create a “Race to the Top” program for higher education, and require colleges to disclose more consumer information, were outlined in his speech on Friday at the University of Michigan at Ann Arbor and in a news release from the White House.
College officials and student-aid experts were particularly curious to learn more about the proposal to tie campus-based aid—a small fraction of federal aid spending, which is dominated by Stafford Student Loans and the Pell Grant program—to tuition policy, value, and the enrollment and graduation of low-income students. The idea that some federal student aid would be based on holding down net tuition and/or tuition growth could be particularly troubling for public colleges, which have been increasing their price tags to help make up for cuts in state appropriations.
“I question whether there’s an understanding of why tuition goes up at public universities,” said Shirley A. Ort, associate provost and director of scholarships and student aid at the University of North Carolina at Chapel Hill. The link between tuition and state support is often lost on the public, she said.
Public universities have a responsibility to educate students who can’t afford to go elsewhere, said Sarah Bauder, assistant vice president for enrollment services and student financial aid at the University of Maryland at College Park, but that is hardly their only charge. Ms. Bauder’s university can only cut costs so far without limiting its ability to help fight Maryland’s brain drain, she said.
The campus-based aid programs—Federal Work-Study, Federal Supplemental Educational Opportunity Grants, and Perkins Loans—are distributed to colleges based on a formula that favors original participants in the programs. It’s hardly a great system, said Sandy Baum, an independent higher-education-policy analyst who also blogs for The Chronicle.
Still, linking these programs to college affordability could be problematic, especially for public colleges and their students. Ultimately, a student could miss out on those federal financial-aid programs because she had the misfortune to live and attend college in a state where the higher-education system is raising prices to make up for budget cuts.
The amount of money at stake—the president’s plan suggests putting a total of $10-billion into campus-based aid annually—is not enough to change states’ budget priorities, Ms. Baum said.
Mark Kantrowitz, a student-aid expert who publishes the Web sites FinAid and Fastweb, agrees. This kind of incentive could have an influence, he said, “but there may be some colleges who have no choice but to opt out of it.” As public colleges try to patch up their budgets, extra aid in these programs pales in comparison with what they could bring in by increasing tuition.
Another proposal focused on reining in costs would create a $55-million pot of money to support individual colleges and nonprofit groups in efforts to improve productivity on campuses. That idea surprised Kathy Kurz, partner in Scannell & Kurz, a consulting firm specializing in enrollment management. “I find it very hard to believe colleges aren’t already working very hard on that,” she said.
The president’s plan also includes several proposals for bolstering specific aid programs. It suggests holding the interest rate on subsidized Stafford loans—scheduled to return to 6.8 percent this summer—to 3.4 percent. The plan also calls for doubling, over five years, the number of Work-Study jobs available, and making the American Opportunity Tax Credit, which gives a tax credit for some of the cost of tuition, permanent, among other expansions in aid.
Reactions to those proposals are mixed.
Ms. Ort said that holding down the interest rate would help borrowers repay their loans at a time when “the future just doesn’t look quite as bright right now for a lot of our graduates.”
Mr. Kantrowitz, on the other hand, said keeping the interest rate low would have little effect on the administration’s broader goals: “Nobody goes to college because they got a 3.4-percent interest rate,” he said, and “no one graduates from college because they got a 3.4-percent interest rate.”
Holding the interest rate down would be wonderful, said Diane Lambert Fleming, associate director of the office of scholarships and financial aid at Central Michigan University. The problem, she said, is that the interest rate typically helps pay for the Pell Grant program, and if push comes to shove, preserving Pell Grants is more important than reducing the cost of student borrowing. President Obama’s plan mentions increasing the maximum Pell Grant to $5,635, but the program, often seen as the highest financial-aid priority, has been increasingly expensive and difficult to pay for.
Ms. Ort also likes the idea of expanding Work-Study. “We see a real uptick in the number of students who want Work-Study jobs,” she said. Participating in the program not only helps students pay for college, she said, but can also boost their résumés and give them an edge in the job market later.
Work-Study is generally seen as a program in which everyone wins, said Ms. Kurz. Research shows working on campus can even help with student retention, she said. “That, in my mind, is one of the most important things that’s been proposed.”
But Ms. Baum disagreed. Doubling Work-Study jobs “sounds like a big thing, but it’s not,” she said. There isn’t enough evidence to show if the Work-Study program actually increases job opportunities for students, she said—and ultimately, the federal money subsidizes colleges, not students themselves.
Despite all the uncertainty about how the president’s proposals could play out, Ms. Ort found some encouragement in the way college was discussed in the State of the Union address. It was nice, she said, to hear higher education referred to as something worth investing in, not just as an expenditure.
