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WEDNESDAY BUZZ: College Board Finds Continuing Declines in State Support for Higher Education

October 26, 2011

Obama Announces Plan to Ease Student Debt Burden

​The College Board today released its annual reports, Trends in College Pricing and Trends in Student Aid, which found tuition and fees continuing to rise on campuses around the country, most significantly at public institutions dealing with sharp declines in state funding.

For the fifth consecutive year, the percentage increase in average tuition and fees at public four-year institutions was higher than the percentage increase at private, nonprofit institutions.

California’s 2011-12 tuition and fee increases of 21 percent at public four-year universities and 37 percent at public two-year colleges raised the national averages markedly, the report’s authors point out. The increase for the public four-year sector was 7.0 percent excluding California, and 8.3 percent including it. (See The Los Angeles Times for more on this point.)

“To see increases of 20 percent, as we saw in California, to see gains of 15 percent in other states, is simply unprecedented,” ACE Senior Vice President Terry Hartle told the Associated Press. “Tuition is simply being used as a revenue substitute in many states.”

In a statement released this morning, ACE President Molly Corbett Broad highlighted the roll of both state and federal policy in setting tuition.

“It is particularly troubling to see that over the past decade, state funding at colleges and universities has fallen 23 percent per student after inflation,” said Broad. “That number shows it has become all too common for state legislatures to dip into the pockets of students and families to balance state budgets, leaving public institutions between a rock and a hard place when setting tuition rates.”

However, she continued, “It is equally clear that federal student aid and tax benefits are of paramount importance. This year, 46 percent of all grant aid for millions of students across the country came from the federal government, which clearly illustrates how serious congressional cuts to these programs would be.”

Also in the news is President Obama’s proposal to ease student loan repayments for some students, which he announced today at the University of Colorado’s downtown Denver campus.

Under the plan, federal student loan repayments for some borrowers would be capped at 10 percent of discretionary income starting in January 2012, two years before the cap was due to take effect under federal law. All remaining debt on their federal loans would be forgiven after 20 years, five years earlier than under current law.

In addition, some borrowers would be able to consolidate loans taken out under the old Federal Family Education Loan Program, when banks issued federal student loans and collected government subsidies, with loans from the government’s Direct Loan Program. The consolidated Direct Loan would give students a half-a-percentage point interest rate reduction.

A negotiated rulemaking session will be required to make these changes, an announcement of which is expected on Friday. As Inside Higher Ed points out this morning, Republicans are already questioning the administration’s authority to enact the plan.

For more on the media’s take on the College Board reports and the Obama proposals, see the following:

A Shifting Burden
Inside Higher Ed

Tuition and Fees Rise More Than 8% at U.S. Public Colleges
USA Today

Rise in Sticker Price at Public Colleges Outpaces That at Private Colleges for 5th Year in a Row
The Chronicle of Higher Education

President to Ease Student Loan Burden for Low-Income Graduates
The New York Times

Obama's Student Loan Debt-Relief Plan: Too Good To Be True?
The Christian Science Monitor

Obama Administration Takes Steps to Ease Burden on Student Borrowers
The Chronicle of Higher Education

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