Saying the rising costs of college are punishing students who have played by the rules, President Obama on Thursday announced that the federal government will take a broader role in pushing schools to lower costs by rating schools based on their educational value, and in trying to tie taxpayer money to school performance.
Mr. Obama, speaking at the State University of New York at Buffalo, said he would cap student loan repayments at 10 percent of future paychecks but also would take steps to discipline students who are attending school on federal grants by doling out the money in chunks to make sure they stay in school.
The president made the announcements as part of a two-day bus tour through New York and Pennsylvania as he tries to breathe life back into his domestic agenda, which has stalled amid budget and partisan battles on Capitol Hill.
To counter that, Mr. Obama returned to the rich versus poor theme he struck on the campaign trail last year, saying his efforts to control education costs are in line with his other moves, such as raising taxes on the wealthy, signing his health care legislation and bailing out automobile manufacturers.
“We can’t price the middle class and everybody working to get into the middle class out of a college education,” Mr. Obama said. “We can’t go about business as usual.”
Mr. Obama has been promising action on rising college costs since he took office, and Republicans’ reaction to his announcement was a yawn.
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“Lame speech, lame duck,” read the headline on the statement from the Republican National Committee.
Mr. Obama said the federal government and colleges have been in a type of financial arms race in recent years, with the government boosting its contributions and schools raising their prices.
“At some point, the government’s going to run out of money,” the president said.
Beginning in 2015, Mr. Obama said, he would have the Education Department compile and release a scorecard of colleges that provide the best values. The formula would look at affordability, measured by tuition costs versus how many students are taking loans or are on scholarship; productivity, measured by graduation rates and the earnings of graduates; and “access,” measured by the percentage of students who receive federal aid.
The White House said that by 2018, after the scorecard has been refined, federal funding would be tailored to reward schools that accept low-income students and do well with the rest of the formula.
The plan also would push colleges and universities to try new avenues of education, such as lower-cost online courses or awarding degrees based on how much students have learned, not on how many classes they have taken.
Congress will have to approve the president’s plan to dock schools’ federal funds for poor performance on the Education Department scorecard, and lawmakers also would have to pass legislation to cap student loan repayments at 10 percent of postgraduate incomes.
Lawmakers are scheduled to debate and reauthorize the Higher Education Act, which is due to expire at the end of this year.
Rep. John Kline, Minnesota Republican and chairman of the House Committee on Education and the Workforce, agrees with Mr. Obama’s idea of promoting innovation among colleges but said the proposed ranking system is “arbitrary” and could stifle innovation.
Sen. Chuck Grassley, Iowa Republican, said he sees areas where members of his party can work with Mr. Obama to control costs, but he urged the president to call on colleges to limit salaries for executives.
Mr. Grassley also said the key to controlling costs is to help the consumer side of the equation.
“The more students and parents become savvy shoppers, the more colleges would be forced to rein in rising costs to compete for students,” Mr. Grassley said.