ANN ARBOR, Mich. – President Obama offered a plan Friday to reduce the costs of higher education by increasing the amount of federal grant money available in low-interest loans and tying it directly to colleges’ ability to reduce tuition.
Obama’s proposal would significantly boost federal investment in the Perkins loan program from $1 billion to $8 billion and revamp the formula for distributing the money. Under the plan, colleges would be rewarded based on their success in offering relatively lower tuition prices, providing value and serving low-income students, the White House said.
The plan would not cost taxpayers additional dollars because students pay off the aid money with interest, officials stressed.
“We’re putting colleges on notice, that you can’t assume you’ll just jack up tuition every single year,” Obama said at a rally before about 4,000 students at the University of Michigan. “If you can’t stop tuition going up, your funding from taxpayers will go down. We should push colleges to do better; we should hold them accountable if they don’t.”
The administration also is proposing to provide $1 billion in aid to states that curb higher education costs and to create a competition that provides $55 million in start-up funding for higher education institutions to pursue innovation to boost productivity.
Obama’s appearance in Ann Arbor was the final stop of his three-day tour of five battleground states that comes in the wake of his State of the Union address. His college aid proposals are aimed at boosting support among a key base from 2008: young people.
The president has focused attention on taming the rising costs of higher education, which is one of the central concerns of the Occupy Wall Street protests over the past year.
Last fall, he announced a strategy to consolidate federal student loans and reduce interest rates to help college graduates pay off their debt.
Obama tied in access to higher education with his State of the Union address themes of creating an economy that offers more equity for the middle class.
“There is no greater predictor of individual success than a good education,” Obama said. “Today’s unemployment rate for those with college degrees is about half the national average. Their incomes are twice as high as those who do not have a high school diploma. College is the single most important investment you can make in your future.”