College Affordability and Completion: Ensuring a Pathway to Opportunity

College Affordability and Completion: Ensuring a Pathway to Opportunity

"By 2020, America will once again have the highest proportion of college graduates in the world."

— President Barack Obama, February 24, 2009

Creating a clear path to the middle class and ensuring our nation's economic prosperity means opening the doors of higher education to more Americans. Today, three-quarters of the fastest-growing occupations require education and training beyond a high school diploma. Yet nearly half the students who begin college in this country don't finish within six years. And tuition continues to rise, putting college out of reach for the very families that need it most to join the middle class. A generation ago, America led the world in college attainment of young adults; now, we rank twelfth. The Obama administration is committed to restoring our world leadership in college completion and ensuring that every student has access to an affordable and high-quality postsecondary education.

College completion rates: The United States ranks 12th in the world in the percentage of young adults with a college education.

The need

Today, as never before, college offers a path to greater economic security, professional fulfillment and civic engagement. Yet it's increasingly out of reach for many U.S. students. Over the past three decades, average tuition at a public 4-year college has increased by more than 250 percent. A college credential remains an excellent investment—but the average borrower now graduates with nearly $30,000 in debt, and student loan default rates are rising. Of those who enter college, too many leave without earning a degree—a problem that's especially severe in low-income communities, where a young person's chance of graduating from high school and entering and completing college is only 9 percent.

The goal

President Obama has set two ambitious goals: for all adults in America to pursue at least one year of higher education or career training, and for America to regain its role as the world leader in college attainment.

To place postsecondary education within reach of every American, the Obama administration is taking action to provide the resources that students and families need to make good choices and afford college; bring down the cost of getting a degree; drive systemic postsecondary education reforms and investments in states; reward colleges for results; promote innovation; and ensure that student debt remains affordable.


  • To help millions more families afford college, the administration has made historic investments that increased the maximum Pell Grant award for working and middle class families by $1,000, kept student loan interest rates affordable, created the American Opportunity Tax Credit, and expanded income-based repayment to help borrowers manage their student loan payments. A simplified Federal Student Aid (FAFSA) and a "Financial Aid Shopping Sheet" have made it easier for students to apply for and compare aid packages.
  • To keep costs down and increase access and success for the nation's most vulnerable learners, the administration is working with colleges, nonprofits, and business and philanthropy leaders to develop innovations that improve affordability and completion.
  • To provide the public with good information, the U.S. Department of Education is working to put more tools in people's hands, such as the College Scorecard. One crucial step is developing a new ratings system that will measure college performance so that students and families can select schools that provide the best value.

Key elements in the President's budget request include:

  • College Opportunity and Graduation Bonus (10-year budget, $7 billion): To reward colleges that successfully enroll and graduate a significant number of low- and moderate-income students on time and encourage all institutions to improve their performance, the new College Opportunity and Graduation Bonus program would provide an annual grant to eligible institutions based on their number of on-time graduates that receive Pell Grants. This new initiative would support innovations, interventions, and reforms to further increase college access and success, such as providing additional need-based financial aid, enhancing academic and student support services, and implementing technology-based or other accelerated learning opportunities.
  • State Higher Education Performance Fund ($4 billion): These competitive state grants would encourage systemic efforts to make higher education more affordable and increase college access and success, particularly for low-income students. State grantees would adopt strategic higher education reform policies and provide federal and state resources to public colleges and universities based on their performance. State policies would promote alignment with the K-12 system; ensure seamless transitions to higher education for all students; build strong postsecondary pathways from the workforce system; and empower students and families with clear, relevant information about the return on investment of enrolling at different colleges and universities. Funds could be used to support and scale up effective and innovative practices that improve access and success at public colleges and universities while reducing cost per degree. States would receive up to four years of funding, and would match their federal grants, dollar-for-dollar, for a total of $8 billion in four years.
  • College Success Grants ($75 million): This new competitive program aims to support the implementation of sustainable strategies, processes and tools, including those based on technology upgrades, to reduce costs and improve outcomes for students. Grants would go to Historically Black Colleges or Universities and other Minority-Serving Institutions. Funded activities could include partnering with school districts and schools to provide college recruitment, awareness, and preparation activities; establishing high-quality dual-enrollment programs that allow students to earn college credit while still in high school; providing comprehensive student support services; and reducing the need for remedial education.
  • First in the World Fund ($100 million): Building on fiscal year 2014 appropriations of $75 million, this program invests in cutting-edge innovative strategies and practices that improve educational outcomes and make college more affordable for students and families.
  • Pay As You Earn (PAYE) Expansion: To make sure that students and families have an easy-to-understand insurance policy against unmanageable debt now and in the future, the budget proposes to extend PAYE to all student borrowers, regardless of when they borrowed. The budget also would reform PAYE to safeguard the program for the future and ensure that program benefits are targeted to the neediest borrowers.

The President's budget reflects the Obama administration's commitment to the Pell Grant program and fully funds the maximum award of $5,830 in 2015. The proposal also would help borrowers manage their debt by extending Pay As You Earn to all student borrowers and reforming its terms to ensure that benefits are targeted to the neediest borrowers; reform campus-based aid to promote affordability, quality and outcomes; and support the development and refinement of the new college ratings system.

Action by the Obama administration and Congress has helped millions of families afford college. The number of students able to afford college with Pell Grants has grown by 50 percent, to nearly 9 million, and the President's Pay as You Earn plan expanded income-based college loan repayment to an additional 1.6 million students. Established in 2009, the American Opportunity Tax Credit provides up to $10,000 for four years of college tuition for families earning up to $180,000. The administration worked with Republicans and Democrats in Congress to keep interest rates low on student loans now and in the future.

Families also have access to better information today. Since the launch of the Financial Aid Shopping Sheet, 2,000 institutions—enrolling almost half of all college students nationwide—have adopted this tool, which helps students compare various aid packages and understand the aid for which they qualify. In 2013, the administration also launched the "College Scorecard," which provides critical information on nearly 4,000 colleges and universities.

In addition, the administration has dramatically simplified the Federal Student Aid (FAFSA). And, the federal "Income-Based Repayment" and "Pay as You Earn" programs are helping student borrowers to manage their debt, especially in the early years of repayment.

To help borrowers struggling with existing debt, the Department is also ramping up its efforts to make sure they know and understand all their repayment options. And, for those borrowers who are among the millions of Americans using TurboTax to file their annual returns, the Department has launched an innovative public-private partnership with the Department of Treasury and Intuit Inc., to raise awareness about income-driven repayment plans on the TurboTax website. The envelopes for this year's federal tax refunds will also feature information regarding income-driven repayment plans, including a link to the Department of Education's student loan repayment estimator.

In addition, at a White House event in January 2014, more than 100 colleges and organizations announced commitments to expand college opportunity.

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