State of the Union: President Obama Talks Affordable Education But Barely Student Loans
February 14, 2013

President Obama’s Tuesday State of the Union address devoted only a few minutes to the critical topic of education and little of that to higher education. The bulk of the time was devoted to pre-school through high school education but in the last moments of that topic, he finally got to college education and affordability issues. What was disappointing is that the President failed to mention student loans in any meaningful way. Here’s the only mention POTUS made about this critical issue:

But today, skyrocketing costs price too many young people out of a higher education or saddle them with unsustainable debt. Through tax credits, grants, and better loans, we’ve made college more affordable for millions of students and families over the last few years.


His thesis on higher education had little to do with those already in debt. Instead Obama said: “Taxpayers cannot continue to subsidize the soaring cost of higher education.” I agree, but I also see that without students pursuing higher education, our country will not continue to prosper. I hope that his focus on the future of college affordability is not an indication that his interest in helping those already burdened by the “unsustainable debt” the President referenced will not be forgotten.

From there, the President went on to discuss the “skyrocketing costs” of higher education. He called on colleges and universities to reduce expenses and said that affordability should be a factor in determining how schools are awarded federal aid. Obama called on Congress to reform the Higher Education Opportunity Act with an eye toward pushing schools to find ways to cut costs. The President also announced the launch of a College Scorecard from the US Department of Education’s College Affordability and Transparency Center. The College Scorecard is intended to give an indication of the affordability and value of the school and rates five factors. The first scorecard I pulled from the system was Pratt – I had a friend who attended the prestigious art school that is still paying off his student loans 18 years past graduation…

#1 Costs – Don’t be fooled if this number looks reasonable. Cost does not equal price. This number is the average price an undergraduate will pay after grants, scholarship and financial aid you don’t have to pay back are applied. For instance, in the image above for Pratt Institute in Brooklyn, New York, the actual cost per year is around $55,000 but is listed on the scorecard as $34,813.

#2 Graduation Rate – This number is one of the most telling on the scorecard. Pratt has what’s considered a high cost, but with a comparatively low graduation rate. Most Ivy League schools have graduation rates in the mid to high 90th percentiles with costs much lower. If you don’t graduate, was it worth the money? Was it a good experience that will serve you well for the amount you paid?

#3 Loan Default Rate – This rate evaluates how many loans issued to undergraduates of this school have been defaulted. The rate shown here is 9.7% and contrasted again to Ivy’s with their low, low rates of 3% or less, this seems high, although below the national average.

#4 Median Borrowing – This tells you how much students and/or their parents borrow to finance an education at this institution. You’ll see Pratt has a very high rating and it shows that most students pay nearly $310 per month for 10 years to be free of their student loan debt.

#5 Employment – This field is not populated yet and advises “The U.S. Department of Education is working to provide information about the average earnings of former graduate undergraduate students at Pratt Institute…” This disclaimer is used on all the pages for now as this functionality does not appear to be in play yet.

You can research almost any college’s scorecard here. Out of curiosity, I pulled a couple of more scorecards to compare. Above is the University of Phoenix online school’s scorecard. Online schools are growing in prevalence and this is one of the largest, so I wondered how it would be rated.  The cost of this school is on the borderline of medium-high, but it’s the staggeringly low graduation rate that caught my eye. Perhaps students start there and graduate elsewhere, otherwise this number seems disastrously low. What’s more, the student loan default rate is nearly double the national average at a whopping 26.4%. I infer (I hope not incorrectly) that people borrow to attend this school, but then many cannot afford their student loans because they did not graduate. This seems like a less than stellar value to me – at least according to the scorecard.

And since I mentioned Ivy scorecards, it’s only fair to present one. Above is Harvard’s astonishing scorecard. Not that I ever thought it was a slouch institution, but this is incredible. Not only is Harvard ranked in the medium scale for cost, but their tuition has dropped over 15.5% in the years surveyed. The 97.4% graduation rate is quite impressive, but I’m sure if you worked that hard to get into Harvard, you don’t want to leave without your sheepskin.

The student loan default rate is just 1% which speaks volume to the employability of a grad with a Harvard diploma. But what’s really interesting is the low student loan payments that average less than $90 per month. To me, this indicates wealthy parents. No wonder their default rate is so low – the payments are incredibly affordable. But what I wonder is whether this averages all the students – including those who don’t have to borrow at all with those who have to borrow a ton – or if it’s the average of only those who have to borrow. That would make a big difference in interpreting this value.

Cool scorecards aside, what was disheartening about the President’s speech was that he did not address the student loan crisis. I agree that encouraging (or forcing) colleges to be more affordable is a positive thing, but does not help those already borrowing and the many drowning in unmanageable debt. But one person who did discuss student loans was Senator Marco Rubio, the Florida Republican who delivered the opposing party’s official State of the Union response. Rubio spoke out in refreshing contradiction to his party’s dim view on student loans and public aid for higher education.


Here are Rubio’s comments in full on student debt and is well worth the read:

I believe in federal financial aid. I couldn’t have gone to college without it. But it’s not just about spending more money on these programs; it’s also about strengthening and modernizing them.

A 21st century workforce should not be forced to accept 20th century education solutions. Today’s students aren’t only 18 year olds. They’re returning veterans. They’re single parents who decide to get the education they need to earn a decent wage. And they’re workers who have lost jobs that are never coming back and need to be retrained.

We need student aid that does not discriminate against programs that non-traditional students rely on – like online courses, or degree programs that give you credit for work experience.

When I finished school, I owed over 100,000 dollars in student loans, a debt I paid off just a few months ago. Today, many graduates face massive student debt. We must give students more information on the costs and benefits of the student loans they’re taking out.

Paying off student loans takes how long

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I look forward to seeing what the Senate may do with the President’s charge to reform the decades old Higher Education Opportunity Act and whether the College Scorecard and pressure to be more transparent about costs will force colleges and universities to make education more affordable. But I see these as longer term issues – not back burner, mind you – but things that will take time to investigate and develop. What needs to be addressed now is making student loans manageable for those already in deep. But if Congress continues on their business as usual track, more concerned with pet projects and late-night parties with cash-flush lobbyists that can leave them needing rejuvenated, we may not get a solution any time soon.

Whether you are in school and have just begun borrowing to finance your education or are a college graduate juggling several loans along with the rest of your life,’s free student loan tool can help you organize and manage your debt more effectively. Click here to learn more and get started today!