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During the State of the Union address on Tuesday, January 24, President Obama put college costs in the national limelight and spoke directly to institutions of higher education. "Let me put colleges and universities on notice," he said, "if you can't stop tuition from going up, the funding you get from taxpayers will go down." Later in the week, at a speech at the University of Michigan in Ann Arbor, the president laid out a plan that includes instituting a Race to the Top for higher education, doubling the number of work-study jobs, and reforming campus-based aid programs to "reward" colleges that meet certain criteria.

Further details of his proposal will be made available upon release of the president's FY13 budget request in mid-February. In the meantime, he has outlined five key elements of his plan:

  • Tying the distribution of federal campus-based aid (Supplemental Educational Opportunity Grants (SEOG), Perkins Loans, and Work Study) to three principles: setting responsible tuition policy, providing good value to students and serving low-income students;
  • Creation of a Race to the Top for state systems of higher education focused on college affordability and completion;
  • Establishment of a First in the World competition to, "develop, validate or scale up innovation and effective strategies for boosting productivity and enhancing quality on campus";
  • Publication of a new online tool - College Scorecard - and updated Financial Aid Shopping Sheet to help students and families with the college decision-making process;
  • Continued and increased federal support for college costs by keeping student loan interest rates low, doubling the number of work-study jobs and making permanent the American Opportunity Tax Credit.

Once the details of the president's budget are released, the plan then heads to Capitol Hill for consideration by Congress. In order to implement almost all of the elements of the president's plan, legislative action is required by Congress and by several different congressional committees of jurisdiction. With tight budget restraints and little to no bipartisanship in either the Senate or the House, the ability to move any new legislation this year will be limited.

While enactment of these proposals may be months away, if at all, colleges and universities should be prepared for intense discussions about college access, quality, and completion in the coming months. Middle-class families are deeply concerned about rising college tuition and President Obama, as well as Republican presidential candidates, will tap into this voter sentiment on the campaign trail.

Early reactions from various corners of the higher education community have been mixed. While some are already expressing concern about federal price controls, others are heartened to see some level of recognition by the Obama administration of the complexity of budgeting at state institutions where annual state appropriations directly impact tuition and revenue. Without additional information, it is difficult to determine just how far the federal government will attempt to reach into institutional and academic planning. NACUBO will continue to provide updates on the president's proposals as additional information becomes available.


Liz Clark

Vice President, Policy and Research


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