By Tamar Lewin
THE NEW YORK TIMES
President Barack Obama will propose today a financial aid overhaul that for the first time would tie colleges’ eligibility for campus-based aid programs Perkins loans, work-study jobs and supplemental grants for low-income students to the institutions’ success in improving affordability and value, administration officials said.
Under the plan, which the president is expected to outline in a speech at the University of Michigan, the amount available for Perkins loans would grow to $8 billion, from the current $1 billion. The president also wants to create a $1 billion grant competition, along the lines of the Race for the Top program for elementary and secondary education, to reward states that take action to keep college costs down, and a separate $55 million competition for individual colleges that have increased their value and efficiency.
The administration also wants to give families clearer information about costs and quality, by requiring colleges and universities to offer a “shopping sheet” that makes it easier to compare financial aid packages and — for the first time — compiling post-graduate earning and employment information to give students a better sense of what awaits them.
These proposed changes would all require congressional approval.
With student-loan debt now outpacing credit-card debt — one rallying cry in the Occupy movement — the administration has for some time promised to address the issue, knowing its potency with voters in an election year. The president met privately with a group of college presidents in December and has been collecting examples of colleges that have kept their costs from spiraling upward.
In his State of the Union address Tuesday night, Obama turned up the heat, alluding to the plan without fleshing out details.
“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,” he said.
Even without specifics, that raised hackles in higher-education circles.
“When we hear things like a shift in federal aid, it causes our antennas to go straight up,” said Molly Corbett Broad, president of the American Council on Education. “Anything that smacks of price controls is of great concern on many levels, especially at a time when states are cutting their budgets — and if the effect of this is to limit tuition, what else would you call it but price controls?”
Broad said that she and university presidents across the nation shared the president’s commitment to affordable higher education, but that it was not so easy to keep tuition down at a time when institutions must also absorb state budget cuts, increase enrollment and bolster financial aid for the growing number of families who need it.
Obama administration officials stressed that expanding the pool of money for Perkins loans would not require new tax dollars, since those loans are repaid with interest. But other parts of the president’s proposal — such as doubling the number of work-study jobs and keeping the interest rate on subsidized Stafford loans at the current 3.8 percent — could be expensive.