President Obama unveiled a new plan Thursday that he says will make higher education more affordable. It includes a rating system that will link federal funding to the cost and performance of institutions.
Before a crowd of more than 7,000 at the University of Buffalo in Upstate New York, the President said, “A higher education is the single best investment you can make in your future.”
For many Americans, however, the rising cost of college and almost-inevitable debt has made that investment pretty questionable. The cost of tuition at four-year public universities, for example, has risen 250% over the last 30 years as the average family income has risen just 16%. Today, the average student loan borrower graduates with more than $26,000 in debt.
“It is time to stop subsidizing schools that are not producing good results and reward schools that deliver for American students and our future,” Obama said.
President Obama has asked officials at the Department of Education to put together a rating system based on factors including: a college’s percentage of students eligible for Pell grants, affordability of schools and how well schools prepare students for post-graduate study and careers. Ratings are set to be released before the beginning of the 2015 school year and Obama is asking Congress to dispense federal student aid based on those ratings starting in 2018. By awarding larger Pell grants and more affordable loans to students at the arguably high-performing schools, the President hopes to encourage competition among institutions.
For Americans that still struggle with federal student debt, he’s also asking Congress to cap payments on loans at 10% of monthly income – an expansion of the administration’s existing income-based repayment program.