State of the Union address may raise pressure on college cost and access

Kristin Tyndall, Associate Editor

Access to college for low-income individuals was a focus point in Tuesday's State of the Union address, indicating that colleges will continue to face pressure over affordability.

Miss the speech? Here are more details on what Obama discussed

'Free' community college

In his comments on higher education, President Obama focused primarily on his recent proposal to make community college free for all students who maintain a 2.5 GPA. He doubled down on the initiative during his speech, saying, "I'm sending this Congress a bold new plan to lower the cost of community college—to zero."

Background story: Obama proposes free tuition at community colleges

The president framed the proposal in terms of expanding access to college for a wide variety of students, noting that community college students include both traditional college-aged individuals and nontraditional students like adults looking to advance their career.

Obama's remarks were framed by the story of Rebekah Erler from Minneapolis, who used a community college education to get a new job and support her family after her husband found himself unemployed. Some analysts have suggested that the president's plan could cost $60 billion over the next ten years.

Savings and debt steal the spotlight

But in the wake of the president's speech, more attention is shifting to other initiatives that he mentioned briefly Tuesday night, including reforming higher ed tax benefits, college-savings plans, and student loans.

The president's reforms for 529 college-savings plans were initially released last weekend as part of a broader tax plan. Specifically, he proposed taxing money withdrawn from these accounts as income, which has been done in the past but was halted under President George W. Bush.

Republicans have strongly criticized Obama's proposal, saying that it would limit college choice for individuals who rely on the savings plans to attend higher-priced colleges. Rep. Lynn Jenkins (R-Kansas), a leading member of the GOP, says she will introduce a bill to preserve the current tax status of college-savings plans.

According to a report by the Government Accountability Office:

  • About half of families using 529 or Coverdell college savings plans earned over $150,000 per year, placing them in roughly the top 10% of American households.
  • In contrast, the median income for families that include a college student is only $47,747.

Meanwhile, other analysts are noting how little time in his speech Obama devoted to student loan debt, which represented only about 60 of his 6,860-word speech. Student loan debt had been a centerpiece of the president's higher education comments in three of his past five major addresses, PBS NewsHour reports.

But Tuesday night's speech aside, the administration's actions suggest that alleviating student loan burdens remains a major priority. Next month, the Department of Education is set to begin considerations for reforming student loan repayment plans. That follows Obama's proposal to eliminate taxes on debt that is forgiven under the plans.

Furthermore, the president has found some bipartisan support for his goal to simplify the FAFSA form that students use to apply for financial aid (White House release, 1/20; McKinnon/Peterson, Wall Street Journal, 1/20; Stratford, Inside Higher Ed, 1/21; Weissman, Slate, 1/21; Calvert, PBS NewsHour, 1/20).

The takeaway: President Obama's priorities for higher education emphasize improving affordability and access for low-income students.

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