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 AACC's Analysis of President Obama's College Affordability Proposals 


Today, the Obama administration released far-reaching proposals for federal higher education programs. Almost all of the ideas in Blueprint for an America Built to Last would require congressional approval. Given that many of these concepts will be controversial, and that this is an election year, the likelihood of their being adopted in 2012 seems remote. However, the concepts advanced here, as well as some of the specific ideas, are likely to be debated at the national level for many months and will no doubt influence the next reauthorization of the Higher Education Act, scheduled for 2013.

The Obama affordability plan has a number of features:

  • Campus-based programs. Federal Work-Study, Supplemental Educational Opportunity Grants, and Perkins loans would be distributed according to a new formula based on keeping tuitions low, "providing good value" to students, and serving low-income students.

    AACC's Analysis: As the administration asserts, the current formulas for distributing campus-based funds are badly outdated. In addition, these formulas do not serve community college students well. They receive only 10% of the funding even though they represent almost 45% of all students attending nonprofit institutions. AACC generally opposes tying student aid funding to institutional outcomes, given the extraordinary difficulty of fairly measuring them across diverse colleges and universities, but the campus-based funding formulas do need revisiting.

  • College affordability and completion Race to the Top. The president is proposing a $1 billion program for states to revamp their funding structures, better align K–12 education with higher education, and maintain "adequate" levels of support.

    AACC's Analysis: Providing states with incentives to better support higher education and improve its performance is welcome. Many states have already undertaken initiatives along the lines of those advanced by President Obama. In addition, state systems of higher education, community colleges among them, have been leery of federal involvement in areas of policy, financing, and governance. However, a federal commitment to ensuring adequate state support for community colleges, whose funding has been savaged in the great recession, is a positive development. The long-term decline in state support for public higher education, as measured by the percentage of state budgets devoted to this function, needs to be reversed.

  • First in the world competition. A new $55 million competitive grant program for colleges and nonprofit organizations would be created to boost productivity and enhance quality. A scaling up and enhancement of many activities currently underway is anticipated.

    AACC's Analysis: Additional support for the many activities currently underway at community colleges is positive. This funding might help bring to scale exciting innovations occurring across the country. Private colleges would also be eligible for this program, while the new Race to the Top program would focus on state institutions.

  • Empowering families and students to be informed consumers. The administration would alter and expand existing federal reporting and disclosure requirements.

    AACC's Analysis: Some of the required information is clearly directed to students contemplating attendance at 4-year colleges who are trying to choose between multiple institutions. Significantly, the administration is also proposing to "begin collecting earnings and employment information," which could enhance community college efforts in this regard.

  • Redoubling federal support to tackle college costs. The administration wants to keep the interest rate on subsidized Stafford Loans at 3.4%, double the number of Work-Study Jobs, and has reiterated its support for making the American Opportunity Tax Credit (AOTC) permanent.

    AACC's Analysis: AACC strongly supports making AOTC permanent and providing greater Work-Study support. These investments in student success are welcome.

For more information, contact David Baime, Senior Vice President for Government Relations and Research, or Jim Hermes, Director of Government Relations.

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