Excerpts from the President's speech at University of Buffalo Thursday morning:
"So let me be specific. My plan comes down to three main goals. First, we’re going to start rating colleges not just by which college is the most selective, not just by which college is the most expensive, not just by which college has the nicest facilities -- you can get all of that on the existing rating systems. What we want to do is rate them on who's offering the best value so students and taxpayers get a bigger bang for their buck. (Applause.)
Number two, we’re going to jumpstart new competition between colleges –- not just on the field or on the court, but in terms of innovation that encourages affordability, and encourages student success, and doesn’t sacrifice educational quality. (Applause.) That’s going to be the second component of it.
And the third is, we’re going to make sure that if you have to take on debt to earn your college degree that you have ways to manage and afford it. (Applause.)
So let me just talk about each of these briefly.
Our first priority is aimed at providing better value for students -- making sure that families and taxpayers are getting what we pay for. Today, I’m directing Arne Duncan, our Secretary of Education, to lead an effort to develop a new rating system for America’s colleges before the 2015 college year. Right now, private rankings like U.S. News and World Report puts out each year their rankings, and it encourages a lot of colleges to focus on ways to -- how do we game the numbers, and it actually rewards them, in some cases, for raising costs. I think we should rate colleges based on opportunity. Are they helping students from all kinds of backgrounds succeed -- (applause) -- and on outcomes, on their value to students and parents.
So that means metrics like: How much debt does the average student leave with? How easy it is to pay off? How many students graduate on time? How well do those graduates do in the workforce? Because the answers will help parents and students figure out how much value a college truly offers.
There are schools out there who are terrific values. But there are also schools out there that have higher default rates than graduation rates. And taxpayers shouldn’t be subsidizing students to go to schools where the kids aren't graduating. That doesn’t do anybody any good. (Applause.)
And our ratings will also measure how successful colleges are at enrolling and graduating students who are on Pell grants. And it will be my firm principle that our ratings have to be carefully designed to increase, not decrease, the opportunities for higher education for students who face economic or other disadvantages. (Applause.)
So this is going to take a little time, but we think this can empower students and families to make good choices. And it will give any college the chance to show that it’s making serious and consistent improvement. So a college may not be where it needs to be right now on value, but they’ll have time to try to get better.
And we want all the stakeholders in higher education -- students, parents, businesses, college administrators, professors -- to work with Secretary Duncan on this process. And over the next few months, he’s going to host a series of public forums around the country to make sure we get these measures right. And then, over the next few years, we’re going to work with Congress to use those ratings to change how we allocate federal aid for colleges. (Applause.)
We are going to deliver on a promise we made last year, which is colleges that keep their tuition down and are providing high-quality education are the ones that are going to see their taxpayer funding go up. It is time to stop subsidizing schools that are not producing good results, and reward schools that deliver for American students and our future. (Applause.)
And we’re also going to encourage states to follow the same principle. Right now, most states fund colleges based on how many students they enroll, not based on how well those students do or even if they graduate. Now, some states are trying a better approach. You got Tennessee, Indiana, Ohio -- they’re offering more funding to colleges that do a better job of preparing students for graduation and a job. Michigan is rewarding schools that keep tuition increases low. So they’re changing the incentive structure.
And I’m challenging all states to come up with new and innovative ways to fund their colleges in a way that drives better results. (Applause.)
Now, for the young people here, I just want to say that just as we’re expecting more from our schools that get funding from taxpayers, we’re going to have to expect more from students who get subsidies and grants from taxpayers. (Applause.) So we’re going to make sure students who receive federal financial aid complete their courses before receiving grants for the next semester. (Applause.)
We’ll make sure to build in flexibility so we’re not penalizing disadvantaged students, or students who are holding down jobs to pay for school. Things happen. But the bottom line is we need to make sure that if you’re getting financial aid you’re doing your part to make progress towards a degree. And, by the way, that’s good for you, too, because if you take out debt and you don’t get that degree, you are not going to be able to pay off that debt and you’ll be in a bind. (Applause.)
All right, second goal: We want to encourage more --
AUDIENCE MEMBER: We love you, Obama!
THE PRESIDENT: (Laughter.) Thank you.
The second thing we want to do is to encourage more colleges to embrace innovative new ways to prepare our students for a 21st century economy and maintain a high level of quality without breaking the bank.
So let me talk about some alternatives that are already out there. Southern New Hampshire University gives course credit based on how well students master the material, not just on how many hours they spend in the classroom. So the idea would be if you’re learning the material faster, you can finish faster, which means you pay less and you save money. (Applause.) The University of Wisconsin is getting ready to do the same thing.
You’ve got Central Missouri University -- I went there, and they’ve partnered with local high schools and community colleges so that their students can show up at college and graduate in half the time because they’re already starting to get college credits while they’re in high school or while they’re in a two-year college, so by the time they get to a four-year college they’re saving money. (Applause.)
Universities like Carnegie Mellon, Arizona State, they’re starting to show that online learning can help students master the same material in less time and often at lower cost. Georgia Tech, which is a national leader in computer science, just announced it will begin offering an online master’s degree in computer science at a fraction of the cost of a traditional class, but it’s just as rigorous and it’s producing engineers who are just as good.
So a lot of other schools are experimenting with these ideas to keep tuition down. They’ve got other ways to help students graduate in less time, at less cost, while still maintaining high quality. The point is it’s possible. And it’s time for more colleges to step up with even better ways to do it. And we’re going to provide additional assistance to states and universities that are coming up with good ideas.
Third thing, even as we work to bring down costs for current and future students, we’ve got to offer students who already have debt the chance to actually repay it. (Applause.) Nobody wants to take on debt -- especially after what we’ve seen and families have gone through during this financial crisis. But taking on debt in order to earn a college education has always been viewed as something that will pay off over time. We’ve got to make sure, though, that it’s manageable.
As I said before, even with good jobs, it took Michelle and me a long time to pay off our student loans -- while we should have been saving for Malia and Sasha’s college educations, we were still paying off our own. So we know how important it is to make sure debt is manageable, so that it doesn't keep you from taking a job that you really care about, or getting married, or buying that first home.
There are some folks who have been talking out there recently about whether the federal student loan program should make or cost the government money. Here’s the bottom line -- government shouldn’t see student loans as a way to make money; it should be a way to help students. (Applause.)
So we need to ask ourselves: How much does a federal student loan cost students? How can we help students manage those costs better? Our national mission is not to profit off student loans; our national mission must be to profit off having the best-educated workforce in the world. That should be our focus. (Applause.)
So, as I mentioned a little bit earlier, two years ago, I capped loan repayments at 10 percent of a student’s post-college income. We called it Pay-As-You-Earn. And it, along with some other income-driven repayment plans, have helped more than 2.5 million students so far.
But there are two obstacles that are preventing more students from taking advantage of it. One is that too many current and former students aren’t eligible, which means we’ve got to get Congress to open up the program for more students. (Applause.) And we’re going to be pushing them to do that.
The other obstacle is that a lot of students don't even know they're eligible for the program. So starting this year, we’re going to launch a campaign to help more borrowers learn about their repayment options and we’ll help more student borrowers enroll in Pay-As-You-Earn. So if you went to college, you took out debt, you want to be a teacher, and starting salary for a teacher is, let’s say, $35,000, well, only 10 percent of that amount is what your loan repayment is. Now, if you're making more money, you should be paying more back. But that way, everybody has a chance to go to college; everybody has a chance to pursue their dreams.
And that program is already in place. We want more students to take advantage of it. We're really going to be advertising it heavily.
Now, if we move forward on these three fronts –- increasing value, encouraging innovation, helping people responsibly manage their debt –- I guarantee you we will help more students afford college. We’ll help more students graduate from college. We’ll help more students get rid of that debt so they can a good start in their careers. (Applause.)
But it’s going to take a lot of hard work. The good news is, from what I hear, folks in Buffalo know something about hard work. (Applause.) Folks in America know something about hard work. And we've come a long way together these past four years. We're going to keep moving forward on this issue and on every other issue that’s going to help make sure that we continue to have the strongest, most thriving middle class in the world. We're going to keep pushing to build a better bargain for everybody in this country who works hard, and everybody who's trying to get into that middle class. (Applause.)
And we're going to keep fighting to make sure that this remains a country where, if you work hard and study hard and are responsible, you are rewarded, so that no matter what you look like and where you come from, what your last name is, here in America you can make it if you try. (Applause.)
Thank you very much, everybody. God bless you. God bless America. (Applause.) "