Obama decries rising cost of college education

ANN ARBOR, Mich. (AP) — President Barack Obama called Friday for an overhaul of the higher education financial aid system, warning that colleges and universities that fail to control spiraling tuition costs could lose federal funds. Speaking to students at the University of Michigan, Obama said he was "putting colleges on notice" that the era of unabated tuition hikes is over.

"You can't assume that you'll just jack up tuition every single year. If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down," Obama said on the final stop of a three-day post-State of the Union trip to promote components of his economic agenda.

Obama told the largely supportive student audience that the nation's economic future depended on making sure every American can afford a world-class education.

"In the coming decade, 60 percent of new jobs will require more than a high school diploma," he said. "Higher education is not a luxury. It's an economic imperative that every family in America should be able to afford."

Obama is also pushing for the creation of new tools to allow students to determine which colleges and universities have the best value.  The administration has already taken a series of steps to expand the availability of grants and loans and to make loans easier to pay back. His administration has also targeted career college programs — primarily at for-profit institutions — with high loan default rates among graduates over multiple years by taking away their ability to participate in such programs. But until now, the administration has done little to turn its attention to the rising cost of tuition at traditional colleges and universities.

The average in-state tuition and fees at four-year public colleges last fall rose 8.3 percent and, with room and board, now exceed $17,000 a year, according to the College Board. Rising tuition costs have been blamed on a variety of factors, including a decline in state dollars, an over-reliance on federal student loan dollars and competition for the best facilities and professors.