Creativity could help Obama solve higher education funding issues

President Barack Obama’s carrot-and stick-approach to making higher education more affordable is a good idea, but it does not address the most significant problem – the precipitous decline in state funding.

Nor can he control the income inequality that has been widening dramatically in this country for the last 30 years, making it far more difficult for low- and middle-income families to afford to send their kids to public colleges and universities.

Mr. Obama made a bus tour Thursday and Friday across New York and Pennsylvania to promote his higher education reform plan. It is intended to push down rising costs and to deliver more quality for students and families.

His plan includes more federal oversight of costs that colleges charge students. He suggested penalizing colleges that allow tuition to rise by giving them less federal aid for their students. Colleges that hold down tuition costs would get more of the money.

Mr. Obama also proposed a ranking system that will include measurements such as student debt, default, on-time graduation, salary achievement after graduation and the number of low-income students who graduate using Pell Grants.

He wants to expand eligibility in the “Pay as You Earn” program, which caps student debt repayment at 10 percent of discretionary monthly income for low-income graduates.

“Government shouldn’t see student loans as a way to make money; it should be a way to help students,” the president said.

These are good ideas and show the president’s commitment to what he says is “a personal mission” to make higher education more affordable. It will be interesting to see whether universities are any more open to cost-and-results transparency than hospitals are.

But states need to do their part to help students and families afford to receive educations at public colleges and universities.

The College Board, a nonprofit organization, says the cost of college for in-state students at four-year public universities has increased 257 percent in the past 30 years.

This hasn’t affected the top 1 percent income bracket; they’ve seen their incomes rise 275 percent in in the same 30 years. But the bottom fifth on the income ladder has seen their incomes rise by only 20 percent, according to a 2011 study from the Congressional Budget Office.

The president should take his bus to Oregon. There the legislature last month adopted a flat-tax loan plan for graduates of in-state public universities. Kids go to school for free, and then pay 3 percent of their annual earnings for 25 years after they graduate.

Community colleges graduates would pay back 1.5 percent of their income annually. Students who attend school for less time would pay a pro-rated amount. The plan does not require students to pay tuition upfront, which means they would not have to take out traditional loans and incur the corresponding debt.

The approach is similar to one used in Australia, but national education groups say nothing like it has been tried in the United States. The Oregon plan got legislative approval quickly, which higher ed officials say is an indication of the frustration people feel with the current situation.

Oregon’s history of financing higher education is not good. It ranks 46th in the nation in per capita spending on college students. Missouri ranks 47th.

Critics of the Oregon plan point out that it penalizes students with higher earnings potential, and that it might encourage some motivated students who would major in more difficult subjects to go to private colleges or to out-of-state schools.

Wealthy parents who could afford tuition also could look elsewhere for their children’s educational needs, and, as a result bring down the overall quality of the state’s public higher education institutions.

But the benefits would far outweigh the problems. Enabling kids who may have bleak futures to get a quality education benefits not only the students and their families, but society at large. These students will have an opportunity to become productive members of society.

Like Oregon, Missouri should examine its priorities and make funding for higher education a front-burner issue.

For too long, lawmakers in both parties have said the state funding that has gone away will never come back. It should, but even if it doesn’t, what else are they willing to try?

Creativity should not be Oregon’s province alone.

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