The federal government has attempted to step in with even more funding—for instance, during the period that the cost of tuition increased 439 percent, federal spending on Pell Grants increased 475 percent—yet this has only fed the growth in costs. In just the last decade, federal funding for higher education has risen from $64 billion to $169 billion after adjusting for inflation. Forty-six billion dollars of the increase occurred in only the last two years. And now that Washington has taken over the federal loan system, the Department of Education operates as one of the largest banks in the country, with taxpayers left on the hook. America is fast becoming a society where education is unaffordable, a government loan is an entitlement, default is the norm, and loan forgiveness is the expectation. America needs a new normal, where college is affordable and paying off debt is achievable.
President Obama’s approach: Doubling down on the problem
When President Obama speaks to young people about his vision for their future, he invariably forgets to mention that, during his four years as president, their debt has risen and their chances of finding a job have declined. President Obama’s attempts to address the skyrocketing cost of college have backfired. While he may understand the problem, he has no idea how to fix it. Instead, he returns over and over again to the old liberal playbook that has driven up tuition rates for decades. He demands from Congress more federal spending, regulation, and control.
In 2010, President Obama decided that the best way to address the growing cost of college was for the federal government to take over the student loan business. Moreover, he decided that the best way to go about it would be to include the provision in his health care reform bill.
The decision was not about education reform; rather, it was an accounting gimmick that allowed him to claim that his new multi-trillion dollar entitlement program would somehow reduce the federal deficit. Next, he doubled funding for Pell Grants and created a new tax credit for students worth $10,000 over four years. And with costs and student debts continuing to increase, President Obama simply capped monthly student loan repayments at 10 percent of monthly income. In spite of these changes, students attending postsecondary programs are more likely to borrow today than they were three years ago, and the average amount borrowed today is increasing.
While Americans will hear President Obama tout these policies as accomplishments, they will hear less from him about the way that flooding colleges with federal dollars only serves to drive tuition higher. And they will hear nothing at all about the way his budget-busting health care reform will drive prices higher still. The Obama Administration likes to blame states for the tuition increases caused by their own reduction of funding for higher education, but those budget cuts are closely linked to the rising cost of health care and the new costs imposed on states by Obamacare as they are forced to cut their education budgets in order to pay for the new entitlement.
A new vision of affordable and applicable learning
The shared effort of states and the federal government to provide more support for higher education and reduce the cost for students is being overwhelmed by the constant inflation in tuition rates. This country is putting more money into higher education than at any point in history, yet a postsecondary education continues to become more expensive for students and their families. A Romney Administration will tackle this challenge by making clear that the federal government will no longer write a blank check to universities to reward their tuition increases, and by supporting institutions that are pursuing innovative operating models to drive down costs.
To achieve these goals, the federal financial aid system must be simplified. Today it is unnecessarily complex, made up of multiple need-based grant programs, competing loan programs, and duplicative tax benefits, all of which include significant administrative costs. A Romney Administration will eliminate programs that are duplicative, inefficient, or ineffective and concentrate available funds directly on helping students.