President Obama presented an ambitious agenda to promote access to higher education in his State of the Union address Tuesday night, tying the rising cost of college into his larger theme of middle-class fortune.
Obama proposed to “lower the cost of community college — to zero.”
Citing community college programs in Tennessee and Chicago that are free to students, Obama said, “I want to spread that idea all across America, so that two years of college becomes as free and universal in America as high school is today.”
Obama also touted his ongoing efforts to lower the burden of student loans for borrowers.
Republicans and conservatives raised doubts about the higher education proposals even before the speech was delivered, in particular criticizing the president’s plan to limit the benefits of tax-free college savings plans.
The White House had previewed the specifics of the community college plan in the weeks leading up to the State of the Union address: It would benefit as many as 9 million students, and cost $80 billion over 10 years, with the federal government and states splitting the cost of subsidizing tuition. Students would be required to maintain a 2.5 grade point average and remain on track for a degree to get the benefits.
Republicans such as John Kline, the Minnesota congressman who is chairman of the House committee with jurisdiction over education in the House, were dismissive of the plan when the administration began sketching it out. Kline suggested that it was an unaffordable plan, given the government’s existing obligations.
Nevertheless, it’s an “important idea to put forward” at a time when many states are cutting back higher education spending, said Ben Miller, an analyst at the centrist New American Foundation.
“It’s hard to overestimate the power of saying you can make something free,” said Miller, noting that many students and families mistakenly think that the cost of attending college and getting a degree is higher than it is.
But 47 states spend less per student today than they did before the financial crisis decimated state budgets, a recent analysis from the advocacy group Young Invincibles found.
Jennifer Wang, the policy director for the group, called the president’s community college proposal “a great initiative, because it invests in low- and middle-income students and actually tries to keep this conversation going” regarding state cutbacks to higher education spending.
Cuts to public universities and community colleges have translated to greater burdens for students and families, including through higher student loan balances, Wang said.
In previous State of the Union addresses, Obama called for universal preschool, run through the states. That proposal was shunned by Congress.
Debbie Cochrane, research director at the nonprofit Institute for College Access and Success, said the risk to the community college plan failing to gain traction the way the pre-K proposal struggled “is that the federal money doesn’t materialize and more states embrace regressive proposals.”
Cochrane noted that state-level programs, such as one in Tennessee, benefit relatively better-off students by helping pay for tuition, which is generally only 20 percent of the total cost of attending community college. The Obama plan would mitigate that problem by helping students pay not only for tuition but also for textbooks, transportation and living costs.
Regarding student loans, “the administration has a strong track record record on issues of college affordability,” said Cochrane. Specifically, Obama in 2014 expanded a program that caps student loan payments as a percentage of income known as Pay As You Earn. Other Democrats have proposed going further in lowering the loan bills of students. “It’s an area where we know the administration is poised to regulate,” Cochrane said.
In early previews of the State of the Union, the White House also proposed consolidating six higher education tax provisions into just two. The main feature of the change would be an improve American Opportunity Tax Credit, a stimulus-era temporary credit for tuition and fees set to expire in 2017. Obama would make the credit permanent at $2,500 a year, partially refundable.
But to pay for his higher education proposals, among other things, Obama would curtail “Section 529” savings plans, which allow for tax-free college savings for families.
Americans for Tax Reform, a group that favors lower taxes, said Tuesday that the change is “indisputably an income tax hike on middle class families with children.”
The group noted that there are 12 million 529 accounts open currently, with an average account balance of about $21,000.
Nevertheless, such savings plans are not used primarily by families facing difficulty financing college, said Miller, and limiting contributions to them will be the “right call but will not be popular.”
