Obama unveils plan to stem rising college tuition costs

Some question whether it's the federal government's place to interfere with college tuition practices.

President Barack Obama is announcing a plan to shift some federal dollars away from colleges and universities that don’t control tuition costs and new competitions in higher education to encourage efficiency as part of an effort to contain soaring college costs.

Obama will spell out his plans Jan. 27 at the University of Michigan in Ann Arbor. The speech will cap a three-day post-State of the Union trip by the president to promote different components of his economic agenda in politically important states.

On Jan. 24 during his State of the Union address, Obama put colleges and universities on notice to control tuition costs or face losing federal dollars. That’s had the higher-education community nervous that he could set a new precedent in the federal government’s role in controlling the rising costs of college.

Obama’s education secretary, Arne Duncan, said Jan. 27 that schools should get federal dollars based in part on their performance.

“Historically, we’ve funded universities whether or not they’ve done a good job of graduating people, whether or not they’ve done a good job of keeping down tuition,” Duncan said on MSNBC’s “Morning Joe.”

The money Obama is targeting is what’s known as “campus-based” aid given to colleges to distribute in areas such as Perkins loans or in work-study programs. Of the $142 billion in federal grants and loans distributed in the last school year, about $3 billion went to these programs. His plan calls for increasing that type of aid to $10 billion annually but changing the formula for how it is distributed.

This reform will reward colleges that are succeeding in meeting the following principles, according to a White House press release:

(1) Setting responsible tuition policy by offering relatively lower net tuition prices and/or restraining tuition growth.
(2) Providing good value to students and families by offering high-quality education and training that prepares graduates to obtain employment and repay their loans.
(3) Serving low-income students by enrolling and graduating relatively higher numbers of Pell Grant-eligible students.