Obama plans to tackle college costs, but options for controlling tuition are limited


President Barack Obama speaks before signing the bipartisan student loans bill in the Oval Office on Friday, Aug. 9, 2013. Obama signed legislation that links student-loan interest rates to financial markets, locking in borrowing costs and preventing a surge in expenses as students return to college this month. (Andrew Harrer/Bloomberg)
August 21, 2013

President Obama says he is on “a personal mission” to make higher education more affordable. But a key factor in rising college prices in recent years is a trend he has little power to reverse: a sharp decline in state funding for public colleges and universities.

On Thursday and Friday, the president plans to go on a bus tour to promote a higher education reform plan that he said would “tackle rising costs and improve value for students and their families.” Details remained under wraps Wednesday.

Obama indicated in a letter to supporters that he is willing to confront entrenched interests in academia. His proposals “won’t all be popular with everyone — including some who’ve made higher education their business — but it’s past time that more of our colleges work better for the students they exist to serve,” Obama said in the letter.

The language echoed a threat Obama made in his 2012 State of the Union address to withhold taxpayer funding from colleges that fail to contain tuition. That pledge has not been carried out.

In theory, the federal government has significant leverage in higher education. Millions of students depend on federal grants and loans. Colleges, in turn, depend on those revenue streams. Campuses benefit in myriad ways from federal funding for student aid, research and other purposes.

But in practice, the leverage is somewhat limited. Public colleges, which enroll a large majority of the nation’s postsecondary students, take far more direction from state governments than from Washington. Private colleges guard their independence fiercely and often resist federal efforts to rein in prices or hold them accountable for performance.

Still, Obama taps into a deep popular resentment over rising tuition every time he renews his college affordability pitch.

Data from the College Board, a nonprofit organization based in New York, show that tuition and fees for private, nonprofit, four-year colleges averaged $29,056 in the 2012-13 school year — not counting room and board. That was nearly triple the inflation-adjusted price for those colleges 30 years earlier, which was $10,901.

For public four-year colleges, the average price of tuition and fees was $8,655 in the past school year. That price, too, had skyrocketed. In inflation-adjusted dollars, tuition and fees for four-year public colleges totaled $2,423 in 1982-83.

Those prices do not include discounts that students obtain through grants and scholarships.

Analysts say price is a function of costs. Colleges have high labor expenses determined by the kind of traditional education Americans prize: classes taught in person by professors who are experts in their fields. (To be sure, those classes are often pretty large and often taught by adjunct faculty and graduate assistants.)

Analysts also note that prices in the public sector have grown far faster in the past decade than in the private sector — a function of dwindling state aid, which has forced public universities to shift the cost burden to students.

“In the near term, you’re not going to markedly improve college affordability for the vast majority of students without affecting the behavior of states,” said Michael Dannenberg, a higher education policy analyst for the Education Trust, who served in the Obama administration’s Education Department from 2010 to 2012. “We need a new federalism for higher education that gets the states to stop disinvesting.”

Dannenberg said Obama could take steps to improve information about colleges for consumers and promote innovation in the delivery of education. One effective way to cut costs, he and other analysts said, would be to ensure that more students get through college in four years or less, rather than taking a fifth or sixth year to graduate.

David A. Bergeron, a higher education analyst at the Center for American Progress, who served more than 30 years in the Education Department under Obama and several other presidents, said too many colleges spend too much money on overhead and unnecessarily lavish improvements to facilities such as student recreation centers. He also said some college presidents are paid huge salaries even though their schools do not perform especially well on such measures as graduation rates.

Bergeron said it is evident that Obama wants to do more to hold colleges accountable for results.

“I think that the president, at this point, is extraordinarily frustrated that higher education institutions in the United States haven’t gotten the message and have not begun to take steps [to contain prices], when they certainly could have,” Bergeron said.

Sandy Baum, a college financing expert who is a senior fellow at George Washington University and at the Urban Institute, warned that intervention in college pricing could have unintended effects.

Often, students who pay full freight in tuition are providing colleges with essential revenue that enables them to give significant grants to students in need, Baum said.

“It’s very complicated to think of how you would design a program so that you’re not hurting students you’re trying to help,” Baum said.

Philip Rucker contributed to this report.

A former Post education editor, Nick writes about college from the perspective of a father of three who will soon be buried in tuition bills.
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