By Jacob Solis
Even as the sky remained unflinchingly gray as rain pattered against the windows of the James S. Brady briefing room, 50 student reporters from around the country lobbed question after question at Press Secretary Josh Earnest. The students came to the room that day as part of White House College Reporter Day, a new event from the Obama administration aimed at bringing student journalists into the national fold. But with all eyes on Earnest, a familiar face emerged from the back of the room.
It just so happened to be President Barack Obama himself.
Striding to the podium, Obama came to the room that day to talk shop on everything from higher education to voter apathy. But more than the event itself, the administration used the time to push new programs from the Department of Education and the Consumer Finance Protection Bureau aimed at tackling mounting student loan debt — a debt that’s growing faster than ever.
Surpassing $1.2 trillion, student loans are the No. 1 one source of debt for Americans. Some 70 percent of students have had to take out loans in order to pay for skyrocketing tuition prices. But what can the Obama administration, which is quickly approaching lame-duck status as elections in November inch closer, do to curb the decades long inflation in the cost of college?
The New Plan
In an effort to slow, but perhaps not stop, the bleeding, education secretary John King announced a new plan Thursday to make student loans “more manageable and more affordable.”
Specifically, the Department of Education announced an effort to put 2 million more student borrowers on the new “Pay as You Earn” plan, which ties monthly student loan repayments to income. The plan, which was implemented late last year, lasts twice as long as the other fixed and graduated rate plans — almost 20 years. This means that graduated students with lower incomes can have lower monthly payments, on average.
On top of that, the CFPB announced a separate effort to simplify information regarding the separate plans a student can use to repay loans: PAYE (income-based), fixed rate and graduated rate.
It’s PAYE that has the Obama Administration excited, but recent numbers from the Government Accountability Office show that there are millions of Americans who qualify for the plan who are not enrolled. Instead, these people stay in graduated or fixed-rate plans that often have much higher monthly payments because on these plans, loans must be repaid within 10 years instead of 20.
More than that, the GAO found that 70 percent of delinquent borrowers, or borrowers who have missed at least one payment, qualify for PAYE and for lower monthly payments. The reason this number is so high, according to Earnest, is largely because the plan is so new.
To help mitigate these numbers, the CFPB has released a simplified fact sheet on the studentloans.gov website called the Student Loan Payback Playbook. It’s more or less a simple chart, but CFPB Director Richard Cordray says it’ll go a long way in putting more borrowers in a better position to repay their loans.
“Millions of Americans are burdened by this debt,” Cordray said. “We cannot leave them in the dark about their repayment options or set them adrift without strong consumer protections. They deserve a well-functioning student loan-servicing marketplace.”
Add on to this the effort to enroll 2 million Americans on PAYE by this time next year and it seems the Obama administration is giving an earnest go at solving the loan problem.
Fixing old problems
These new initiatives still leave the broader issue — the fact that many Americans have to accrue this debt in the first place — untouched. In a conference call to the reporters participating in Reporter Day, King reiterated the necessity of a college education in the modern workplace.
But speaking to a room of the same student reporters the next day, King conceded that while these efforts from the Obama administration, particularly PAYE, are a step in the right direction, there remains plenty of work to be done on the state level.
“States need to carry their share of the burden,” King said. “Over the past few decades, there’s been a disinvestment by states in higher education. As a result, those costs are passed on to students and their families.
The disinvestment King mentions has been marked, to say the least.
Since the 1980s, the annual percent increase in the cost of tuition has always been higher than the percent inflation. After the Great Recession, these increases became drastic. In Nevada, tuition has gone up 24 percent since 2011 and in some states, like Georgia and Arizona, tuition raises have been as high as 60 and 80 percent over five years, according to the Center on Budget and Policy Priorities.
The primary reason for this, according to King, is a lack of commitment by individual states to fund higher education. This was expressly the case in Nevada, where regents for the Nevada System of Higher Education openly doubted that funds cut during the recession would ever be replenished.
“We cannot realistically expect the Legislature to fund enhanced medical education and a Tier 1 effort if we don’t take responsibility for our own future,” said regent Michael Wixom in a 2014 interview with the Las Vegas Review-Journal.
The Department of Education and the White House at large can do all they can to push states to better fund colleges and universities, says King, and Obama’s “America’s College Promise” plan has at least incentivized states to fund college. But at the end of the day, these funding decisions are made in the statehouse, not the White House.
It’s a fact that’s disappointed the White House.
“Too many state governments, in their zeal to cut government spending, are reducing their support for public colleges and universities,” Earnest said. “That’s a bad thing. That is a really poor choice. It’s a short-sighted decision to make — to cut an investment in something that’s going to be critical to the long-term success of your state.”
But these statehouse policies aimed at taking the higher education system off the balance sheets doesn’t look to be letting up anytime soon.
In Nevada, legislators and higher education officials have been locked in battle for some time now since Carson City took an interest in reforming the state’s higher education funding model in 2011. According to a report just last month from the Las Vegas Review-Journal, officials with the Nevada System of Higher Education actively fought to undermine the legislative process during that time in an effort to keep the funding model from changing adversely.
The now-embattled Chancellor Dan Klaich has defended NSHE’s actions, saying that the body is largely independent from the Legislature under the Nevada constitution and that the organization’s efforts five years ago were in search of a fair and equitable funding formula.
On the other side of the table, much of the Nevada Legislature has turned against NSHE. Two Democratic legislators announced last Monday that they would introduce legislation that would completely overhaul NSHE, giving less power to the chancellor, more power to regents and create better mechanisms for oversight.
Former state Senate majority leader and Democrat Steven Horsford, who chaired the committee at the time, has also thrown his voice into the chorus, offering a number of different responses in an appearance on KNPR’s “State of Nevada.”
“I was appalled, alarmed, disgusted, dismayed and I don’t understand why, to this date, Dan Klaich has not offered his letter of resignation,” Horsford said. “This goes against every basic tenet of academic integrity that higher education is to uphold, not just in the state of Nevada but everywhere.”
The outrage over NSHE’s meddling hasn’t limited itself to the left either. In an interview with the RJ, Assembly Speaker John Hambrick, R-Las Vegas, had choice words of his own.
“NSHE has always been difficult to get a straight answer from,” Hambrick said. “They are funded by taxpayer dollars and we are stewards of those monies. We need to get good answers and responsible answers.”
At the end of the day, this legislative furor marks a win for transparency in the NSHE system, but could jeopardize the system’s funding models. However, the Nevada Legislature won’t meet for another session until January of next year, so there is plenty of time for a back-and-forth between NSHE and the statehouse before any legislating actually starts happening.
But funding problems aren’t unique to Nevada. Illinois cut off funding to public universities in March, and schools in Kentucky are already planning tuition hikes to offset $40 million in funds cut earlier this year by Gov. Matt Bevin.
These constant hikes have quickly become an issue on the campaign trail, where Vermont Sen. Bernie Sanders, whose shot at the Democratic nomination has become increasingly distant in recent months, has promised free tuition at public colleges and universities. His opponent, Hillary Clinton, has promised to “hold colleges and universities accountable” when it comes to tuition prices. Even so, either of these proposals are less-than-likely without legislative help and are also hugely (perhaps obviously) dependent on his or her election in November.
And while candidates look to the future, the White House has been trying to make some steps toward institutional change, according to Roberto Rodriguez, the president’s deputy assistant for education.
“Resources matter greatly and the president has put forth proposals to Congress to invest great resources in a new federal-state partnership, which we believe is one way to really build out the public higher education system,” Rodriguez said.
Right now though, there isn’t much the bureaucracy within the DOE or the White House can do to affect institutional funding, especially with a Republican Congress that is less than keen to work with an outgoing president. For Rodriguez, the onus for staving off debt in higher education falls mostly on the shoulders of students, at least for the moment.
In light of the situation, the Obama administration has increased the Pell Grant, which helps low-income students in addition to pushing community college as the gateway to four-year universities. But increasing the amount of federal money students can use to go to college won’t do anything from stopping institutions from simply raising their prices because they can’t find money at the state level.
With no institutional change in sight, the outlook for American college students — past, present and future — continues to grow dim.
Jacob Solis can be reached at firstname.lastname@example.org and on Twitter @TheSagebrush.