February 2012

In his State of the Union address on January 24, 2012, President Obama stated that in today’s global economy, a college education is no longer a privilege for some, but a prerequisite for all, and called for a comprehensive approach to tackling rising college costs. He emphasized the responsibility shared by the federal government, states, colleges and universities to promote access and affordability in higher education by reining in college costs, providing value for American families and preparing students with a solid education to succeed in their careers. Further details of his proposal will be made available upon release of the President's Fiscal Year 2013 budget request in mid-February. However, there are five key elements of his plan that all institutions of higher education should be aware of.

• Reforming Campus Based Programs to promote affordability and value: the president is proposing reforms to federal campus-based aid programs (Supplemental Educational Opportunity Grants (SEOG), Perkins Loans and Work Study) to shift aid away from colleges that fail to keep net tuition down and toward those colleges and universities that do their fair share to keep tuition affordable, provide good value and serve needy students well. These changes in federal aid to campuses will leverage an additional $10 billion in aid annually to keep tuition down.
  
  
• Creating a Race to the Top for college affordability and completion: the president is proposing a program that would spur systemic state reforms to reduce costs for students and promote success in our higher education system at public colleges. This $1 billion investment would incentivize states to (1) revamp the structure of state financing for higher education, (2) align entry and exit standards for all K-12 programs and colleges to facilitate on-time completion and (3) maintain adequate levels of funding for higher education in order to address important long-term causes of cost growth at the public institutions that serve two-thirds of four-year college students.
  
  
• A First in the World competition to generate innovation and quality on college campuses: this $55 million initiative would provide modest start-up funding for individual colleges for projects that could lead to longer-term and larger productivity improvements among colleges and universities, such as course redesign through the improved use of technology, early college preparation activities to lessen the need for remediation, competency-based approaches to gaining college credit and other ideas aimed at spurring changes in the culture of higher education.
  
  
• Empowering families and students to be informed customers: the president is proposing new tools that will improve the decision-making process for American students and allow families to hold schools accountable for their tuition and education outcomes. Examples of these tools are a College Scorecard and a Financial Aid Shopping Sheet.
  
  
• Federal support to tackle college costs: In his State of the Union Address, the president called on Congress to pass legislation to keep interest rates low for the 7.4 million student loan borrowers to reduce future debt, make the American Opportunity Tax Credit permanent and double the number of work-study jobs over the next five years to better assist college students who are working their way through school.
  
  

It is anticipated that these programs will significantly impact the landscape of higher education. Institutions should begin to prepare for these changes as the budget process for the upcoming fiscal year begins. If you have any questions please contact David Capitano at Dave.Capitano@Parentebeard.com or 570.820.0133.