President Barack Obama (AP Photo/Keith Srakocic)

President Barack Obama (AP Photo/Keith Srakocic)

“We’ve got a crisis” – Obama reveals sweeping proposals to lower college costs

In an effort to lower rising college costs, President Obama is proposing sweeping changes, including a new ratings system designed to judge schools on affordability, rewarding colleges for enrolling and graduating low- and moderate-income students, and strengthening academic progress requirements for students receiving aid.

“We’ve got a crisis in terms of college affordability and student debt,” Obama told more than 7,000 students at the State University of New York at Buffalo,  the first of four public schools he is scheduled to speak at in the next few days. The president is taking a two-day bus tour of New York and Pennsylvania to emphasize college costs.  “A higher education is the single most important investment students can make in their own futures. At the same time, it has never been more expensive,” said a written copy of the plan.

The president called for the ambitious government rating system, which would evaluate colleges on several criteria such as average tuition, student loan debt, and graduation rates, to be implemented before the 2015 school year. The ratings system, which is at the centerpiece of his higher education cost overhaul, would be used to determine how federal financial aid is disbursed. Students who attend a higher-rated school would receive more affordable student loans and larger grants.

“It’s time to stop subsidizing schools that are not producing good results and reward schools that deliver American students of our future,” he said.

RELATED: Student loan debt tops $1 trillion

Acknowledging that these changes are significant, Cecilia Muñoz, Director of the White House Domestic Policy Council, said in a conference call with reporters that given the current situation, “it’s really clear we can’t tinker around the edges.”  The top Latina in the Administration said only 58 percent of those students who began college in 2004 have earned a degree in six years, and the average student graduates with $26,000 in debt due to school loans.

RELATED: Using the Latino college experience to revamp financial aid

“We have to do more, create a better bargain and fundamentally rethink how higher education is funded,” Muñoz said. “It’s not going to be popular with everyone, but what it will do is put the interest of middle-class families first.”

According to the Center for American Progress, Latino students are particularly saddled with debt, with 67 percent of Hispanic students who earn bachelor’s degrees graduating with debt. Over the past decade, the number of Latino students taking out loans increased 12 percent. Nationwide, 72.3 percent of Hispanic students rely on financial aid, according to data provided by the White House.

President Obama’s reforms announcement comes on the heels of a Congressional battle on student loan interest rates. Federally subsidized Stafford loans went up from 3.4 percent to 6.8 percent after Congress missed the July 1st deadline to reach a deal to keep rates lower. But the Senate passed legislation in late July to reverse the sharp hikes and link interest rates to market prices.

The President’s proposal drew some praise as well as criticism.

“Both the enormous expense and the fear of crushing debt once they join the job market have long prevented millions of students, especially in the Latino community, from pursuing higher education.  We welcome the positive steps that the president has taken today to help rein in the cost of going to college,” said in a statement Janet Murguía, President and CEO of NCLR.

 

But Florida Republican Senator Marco Rubio said in a statement to Talking Points Memo that “while I share the President’s goal of making college tuition more affordable, I’m strongly opposed to his plan to impose new Federal standards on higher education institutions.    This is a slippery slope, and one that ends with the private sector inevitably giving up more of its freedom to innovate and take risks.”

NBC Latino’s Sandra Lilley contributed to this story.

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