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Plan aims to rein in rising cost of college; Obama ties aid to tuition control

If you are a parent or student who thinks the cost of a college education is spiraling out of control, you'll be happy to know President Obama agrees with you.

And he wants to hold higher ed more accountable.

Colleges and universities that fail to control rising tuition could lose federal funds, under an election-year initiative proposed by the president on Friday when he put 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," Obama said Friday during a stop at the University of Michigan to promote his economic agenda. "If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down."

Whether the initiative can survive Congress remains to be seen, but it certainly strikes a chord with young Americans and working families feeling the sting of rising college costs while their own pay has been stagnant.

Since 2001, tuition and fees at public four-year colleges and universities went up an average of 5.6 percent a year beyond the rate of inflation, according to the College Board.

The average in-state tuition and fees at four-year public colleges rose 8.3 percent last fall to $8,244, or more than $17,000 a year when you tack on room and board, the College Board's latest report shows.

Likewise, costs went up an average of 4.5 percent at private four-year colleges and universities, where the annual price tag is $28,500 -- or more than $38,500 when room and board is included.

"Don't get turned off by the sticker price," said Richard A. Wall, interim vice president for academic affairs at Canisius College.

Wall, and other local college administrators, said colleges are sensitive to keeping down tuition and use anywhere from a quarter to a third of their own money for financial aid to lower a student's cost of tuition.

They had some mixed feelings about the Obama proposal.

"We are a not-for-profit institution. We're not trying to make money," said Cynthia Zane, president of Hilbert College. "Our goal is to provide the best education we can at a very affordable price."

Administrators blame rising tuition costs on a variety of factors, including a decline in state dollars and a sharp increase in their own cost to do business.

There's also competition for the best facilities and professors, as students enter with higher expectations.

"Institutions are looking around at each other trying to keep up with the Joneses," said Robert P. Murphy, vice president for student affairs and enrollment management at D'Youville College.

The cost at local colleges and universities is right around, or below, the national average.

Tuition and fees for in-state undergraduates is $7,482 per year at the University at Buffalo. The cost is $26,400 at Niagara University and $27,890 at St. Bonaventure University. Tuition and fees at Canisius College are a bit above the average, coming in at $30,713.

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

And in a conference call with reporters, Education Secretary Arne Duncan noted that because of the rapid rise in tuition costs, the average total of loans that college students take out has doubled in the last 15 years, to $25,000.

The president -- who first announced the outlines of the financial aid proposal during Tuesday's State of the Union address -- plans to target what is known as "campus based" aid given to colleges to distribute in areas such as Perkins loans or in work study programs. Of the $142 billion in federal grants and loans distributed in the last school year, about $3 billion went to those programs. His plan calls for increasing that type of aid to $10 billion annually.

He also wants to create a "Race to the Top" competition to better use higher education dollars in exchange for $1 billion in prize dollars. A second competition called "First in the World" would encourage innovation to boost productivity on campuses.

Zane and Murphy weren't surprised by some of the initiatives, but said the issue is how performance will be measured for such a diverse range of American institutions.

Some in the higher education community are nervous that the Obama administration could be setting a new precedent in the federal government's role in controlling the rising costs of college.

The economist who authored the study for the College Board, Sandy Baum, offered a mixed critique of the Obama higher-education plan.

She said Obama's call for keeping the interest rate on Stafford loans at 3.4 percent -- and not letting it double this summer -- would have an immediate and positive impact on students and families.

"It would be a temporary fix for some people," she said.

Baum also lauded Obama's call for a "Race to the Top" to reward state college systems that find ways to keep costs down.

Obama's call for reducing federal aid for universities with big tuition hikes is problematic, Baum said.

"Most of the institutions that are having the big price increases are public institutions," she said. "They're not raising their prices because they're spending more. They're raising prices because they're using their tuition increases to partially compensate for declines in state per-student appropriations."

If those institutions held down their tuition to preserve their federal aid, "they would be stretched even more in terms of quality," Baum said.

The Associated Press contributed to this report.

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