Over the course of the Barack Obama’s first term, the President has repeatedly emphasized the need for affordable higher education.
“We can’t allow higher education to be a luxury in this country. It’s an economic imperative that every family in America has to be able to afford,” Obama told the National Governors Association in February.
A recent joint study from the Department of Treasury and Department of Education examined the economic impact of higher education, the economic mobility of degree-earners, and the state of tuition and financial aid.
The distribution of attendance at various types of higher education institute was outlined in the study, showing college attendance trends. Public universities continue to educate the majority of American students, but for-profit institutions are the fastest-growing higher education genre. Nearly 73% of the college-going public is enrolled at public two-year community colleges, four-year institutions, and graduate research institutions, 18% attend private non-profit colleges and universities, and 9% attend private for-profit schools, which have seen a growth of 200,000 in the late 1980s to about two million today.
It’s no secret that those who earn a college degree have greater earning potential than those with only a high school diploma. The study reported that the median weekly earnings a college graduate with an undergraduate degree working full time in 2011 were 64% higher than high school graduates. College graduates are also more likely to hold jobs that offer non-salary compensation such as paid vacation, sick pay and insurance.
Higher education also helps break the cycle of intergenerational poverty. The study showed that children born into the bottom fifth income level are 45% likely to stay at the same level of poverty for their lifetime, whereas college graduates have less than 20% chance of remaining in the same income distribution level.
As college tuition continues to increase, and schools continue to lose state funding, students and the federal government are bearing more of the financial burden of educating the future workforce. The study showed that state funding has decreased from 60% of college revenue in the 1980s to below 40% today. Federal financial aid now contributes the lion’s share of funding beyond student tuition, distributing $124 billion to undergraduates in 2009-2010. In the following year, almost half of all students received a Pell grant, totaling over $35 billion. About $90 billion was distributed to students for Stafford loans alone.
The Obama Administration introduced a number of initiatives to offset the cost of college. The American Recovery Reinvestment Act increased the maximum Pell grant award from $4,731 in 2008 to $5,550 in 2010. The American Opportunity Tax Credit increased the amount parents of college students could save on their taxes from $1,800 to $2,500, and extended the duration of the credit from two to four years. Subsidized Stafford loan interest rates remained at 3.4% instead of increasing to the previously scheduled 6.8%. Students also benefit from changes to loan repayment legislation with the “Pay As You Earn” program that allows students to repay students loans based on their income beginning this year.
Follow Elise Rambaud Marrion on Twitter @elisermarrion.