In a State of the Union address that bore heavy implications for the University, President Barack Obama laid out ambitious policy proposals last Tuesday for reining in the costs of higher education.
In addition to calling on Congress to keep interest rates on federal Stafford loans from doubling in July, extend tax credits for tuition fees, and double the number of work-study jobs in the next five years, Obama urged colleges to do their part in making higher education affordable for students.
“Colleges and universities have to do their part by working to keep costs down,” Obama said in his address. “Some schools redesign courses to help students finish more quickly. Some use better technology. The point is, it’s possible.”
Obama also threatened to take away federal funding from schools which let their tuition rates climb too high, while promising to reward those which kept costs down.
“If you can’t stop tuition from going up, the funding you get from taxpayers will go down,” Obama said. ”Higher education can’t be a luxury—it is an economic imperative that every family in America should be able to afford.”
Tuition and fees for the University have been climbing regularly for years and currently sit at $41,853, up from $35,169 five years ago—the sixth highest in the country, according to Forbes.
The University’s budget for merit- and need-based aid was $88 million for 2011-2012, and $81.4 million in 2010-2011, according to University spokesman Jeremy Manier. Those budgets were mostly independent of federal money, offering institutional grants like the Odyssey Scholarship, which reduces the reliance on loans for students whose families earn less than $90,000 and eliminates loans for families making under $60,000. Roughly half of undergraduates are recipients of need-based aid, taking an average of $34,650, Manier said.
But for federal money to dry up would certainly impact University finances. The University administers federal Perkins and Stafford loans, and participates heavily in the work-study program, which offers students up to 15 hours of work a week in federally subsidized jobs.
Some 711,000 students across the country, most of them undergraduates, received work-study jobs for 2011-2012, and Obama pledged to double that number within five years. Moreover, he has proposed an aggressive expansion of Perkins loans, which carry no fees and accrue no interest while the student is in school.
How these proposals may shape University policy remains to be seen.
“In terms of the new policy proposals, this discussion is still taking shape, so it’s too soon for us to offer a full assessment,” Manier said.
Fourth-year Abe Goldstein said that the University would do well to aid middle-income students. “They try to squeeze the most out of students who can pay,” said Goldstein, who is ineligible for work-study.
Third-year Jen McPhillips, also ineligible for the program, said that finding a paid job on campus is “pretty prohibitive for non work-study students.”
Still, the U of C is likely to be less under-the-gun from Obama’s proposals than public universities, and Goldstein took the University’s $6.58 billion endowment as a sign that it could weather a storm from Washington.
“I think this is more of a concern for a state school,” he said.
McPhillips questioned the logic of Obama’s carrot-and-stick approach altogether, arguing that well-endowed universities do not need federal rewards even if they do limit tuition hikes.
“I’m not sure the incentive structure is correct,” she said. “Schools able to keep costs down have the largest endowments. It seems counterintuitive to give money to those schools.”