Why the U.S. is better able to handle higher gas prices

As the price of gasoline continues to rise — yesterday, I paid a painful $4.25 per gallon — concerns are rising over the potential impact of expensive fuel on the overall economy. But, as Aaron Task and I discuss in the accompanying video, the U.S. economy is better situated to handle higher gas prices than it was last year, four years ago, or ten years ago. The upshot: higher gas prices are going to hurt, and will be painful for many. But they won't torpedo the economy.

For a host of reasons, the world's largest consumer of gasoline is much less likely to be the victim of high gas prices than it was a few years ago. Here's why.

First, compared with 2007 and 2008, corporate and personal balance sheets are in much better shape, and hence better able to absorb rising costs.

Second, the U.S. is a bigger producer of oil than it was a few years ago. Oil consumption is in many ways a zero-sum game: more money spent by consumers on gasoline means more money going into the pockets of oil producers — most of them overseas. But in the last few years, the U.S. domestic oil industry has experienced significant growth, thanks in part to North Dakota's shale oil boom. Government data on crude oil production suggests that 2011 saw the highest level of domestic oil production since 2003. So more of the money spent on more expensive oil will stay in the U.S.

Third, Americans simply drive less, and use less gas, than they used to. Part of that can be ascribed to the fact that employment remains far below the 2007 peak. But on the aggregate, the U.S. economy has figured out how to move more good and people around while driving fewer miles and using less gas. The volume of crude products supplied in the U.S. peaked in 2005 at 7.59 billion barrels, and fell dramatically to 6.85 billion in 2009, and then rose to 7 billion in 2010. That's less than the amount used in 2001. The figure was down again through the first 11 months of 2011, even though the economy and employment were growing.

What happened? In the last few years, the corporate sector got religion about efficiency. Walmart has steadily increased the fuel efficiency of its vast trucking fleet. Through the use of smart logistics and route planning, UPS has shown it can significantly increase the number of packages it delivers even as its trucks drive fewer miles. Businesses that have to spend the most money on gas have the biggest incentive work on efficiency. And so they're investing in alternative fuels and new technologies. The other day in New York, I saw several electric DHL trucks, part of its fleet of 30 battery-powered vans and 50 hybrid trucks. About 30 percent of the taxis in New York City today are hybrids. Bus fleets around the country run on compressed natural gas, as the website CNGNow.com documents.

Fourth, manufacturers have changed their product offerings. Every year, every month, every week, a portion of the massive U.S. car fleet turns over. And thanks to advances and innovations by manufacturers, consumers generally are generally upgrading their mileage when they buy or lease new cars. Hybridcars.com chronicles the continual rollout of new hybrid, electric, and clean diesel models. As its sales dashboard shows, such vehicles account for only a small portion of monthly sales. But the market pressure and the technology created by hybrid development is influencing traditional vehicles. Thanks to consumer pull, government push, and smart engineering, the typical internal combustion engine produced today is significantly more efficient than the one produced a few years ago. For example, GM has now made eAssist standard in its Buick LaCrosse, which boosts its energy efficiency by about 30 percent (city) and 20 percent (highway). The Ford Focus gets 40 miles per gallon, and the company announced earlier this week that sales in February were likely to surpass 20,000, double the amount from February 2011. Chrysler boasts that it has 13 cars in its portfolio that get more than 25 miles per gallon on the highway. Cars sold in 2011 got an average of 33.9 miles per gallon compared with 31.2 in 2007 and 29 in 2002.

Fifth, more people have alternatives to driving than did four years ago. When gas prices rise, ridership of mass transit usually rises in its traditional strongholds like New York, Washington, and Boston. But in the last several years, light rail systems have opened and expanded in many states. And that means more people around the country have alternatives to driving. Phoenix's light rail system, which didn't exist in 2007, carries more than one million passengers per month. Seattle opened its light rail system in the summer of 2009. A light rail system in Hampton Roads, Virginia, went into operation last fall.

This is not to say that rising gas prices won't pinch the budgets of many Americans, or that they won't filter into the economy via higher prices for services and fuel surcharges. They will. But given the changing shape of the U.S. economy over the last several years, the damage is likely to be less severe.

Daniel Gross is economics editor at Yahoo! Finance

Follow him on Twitter @grossdm; email him at grossdaniel11@yahoo.com

View the original article here

Higher gas prices cloud Obama's re-election hopes

WASHINGTON (AP) — Soaring gasoline prices are threatening to undercut President Barack Obama's re-election prospects and offering Republicans an easy target. With prices pushing $4 a gallon and threatening to go even higher, Obama sought Thursday to confront rising public anxiety and strike back at his GOP critics.

"Only in politics do people root for bad news, do they greet bad news so enthusiastically," Obama said of Republicans. "You pay more; they're licking their chops."

Obama said dismissively that all the Republicans can talk about is more drilling — "a bumper sticker ... a strategy to get politicians through an election" — when the nation's energy challenges demand much more. In a speech in Miami, he promoted the expansion of domestic oil and gas exploration but also the development of new forms of energy.

For all the political claims, economists say there's not much a president of either party can do about gasoline prices. Certainly not in the short term. But it's clear that people are concerned — a new Associated Press-GfK poll says seven in 10 find the issue deeply important — so it's sure to be a political issue through the summer.

"Right now, we're experiencing yet another painful reminder of why developing new energy is so critical to our future," the president said. At an average of $3.58 a gallon, prices are already up 25 cents since Jan. 1, and experts say they could reach a record $4.25 a gallon by Memorial Day.

Those higher prices could hurt consumer spending and unravel some of the recent improvements in the economy. And they could also be a daily reminder to voters to question Obama's contention that he's making the nation — and them — more secure.

While motorists are already starting to complain, many economists see the $4-a-gallon mark as a breaking point above which the economy starts to suffer real pain. Analysts estimate that every one-cent increase is roughly a $1.4 billon drain on the economy.

Obama's Republican challengers aren't letting it all slide by. They have stepped up their attacks on his energy policies, including his rejection last month of a pipeline to carry oil from Canada to refineries on the U.S. Gulf Coast. And they're full of promises.

"I've developed a program for American energy so no future president will ever bow to a Saudi king again, and so every American can look forward to $2.50-a-gallon gasoline," former House Speaker Newt Gingrich said in the Wednesday night GOP debate in Mesa, Ariz. He calls his strategy "Drill Here, Drill Now."

At the same event, former Sen. Rick Santorum of Pennsylvania — who has warned of $5-a-gallon gas — asserted that "we have a lot of troubles around the world, as you see the Middle East in flames and what's going on in this country with gas prices and the economy." And former Massachusetts Gov. Mitt Romney suggested that even more troubling than rising gasoline prices was Iranian President Mahmoud "Ahmadinejad with nuclear weapons."

In his speech at the University of Miami, Obama sought to draw a contrast with his GOP challengers and made a pointed reference to what he suggested was Republican glee at rising gas prices.

"And you can bet that since it's an election year, they're already dusting off their three-point plans for $2 gas," Obama said. "I'll save you the suspense. Step one is drill, step two is drill, and step three is keep drilling. .. We've heard the same thing for 30 years. Well, the American people aren't stupid."

Addressing the rising public anxiety, Obama said, "There are no quick fixes to this problem, and you know we can't just drill our way to lower gas prices." Anyone suggesting otherwise was not being honest, he said.

Still, Obama said he had ordered his administration to search for every possible area to help consumers in the coming months. He said his administration's "all-of-the-above strategy," one that includes oil, gas, wind and solar power, is the "only real solution" to the nation's energy challenges.

Gingrich quickly dismissed Obama's energy speech as "excuses and fantasies."

Presidents often get blamed for rising gas prices, but there's not much they can do about them. The current increases at the pump have been driven by tensions in Iran and by higher demand in the U.S. as well as in China, India and other quickly growing nations.

"Obviously, people go to the pump all the time, so it's something that really hits home with the voters," said Fred Greenstein, a Princeton University professor emeritus of politics. "It's an easy issue to talk about, and not an easy issue to accomplish very much on."

In his Miami remarks, Obama said that despite political criticism of his policies "America is producing more oil today than at any time in the last eight years. He also noted that, for the first time in 30 years, the United States is now exporting more petroleum products than it imports.

But Jack Gerard, the president of the American Petroleum Institute, challenged Obama's apparent effort to take credit.

"While oil production is up, the increase relates almost entirely to investment and leasing decisions made before, sometimes long before, this administration came into office," Gerard said. "The increase is also due to oil and gas development on private and state lands over which the administration has little or no control at all."

Though Obama's approval rating on the economy has climbed, his negative rating on handling gas prices is stagnant. Just 39 percent approve of what he's doing there, and 58 percent disapprove, according to the new AP-GFK survey.

Mark Zandi, chief economist at Moody's Analytics, said gasoline prices are likely to keep rising as the summer driving season approaches. "Increasingly, it's becoming the biggest threat to the economy," he said. "And there is little presidents can do to influence gasoline prices in the near term."

Some lawmakers have called for Obama to release oil from the nation's Strategic Petroleum Reserve.

"Rising gas prices could be the difference between an economy that continues to recover and an economy that sinks back into recession," said Rep. Edward Markey, D-Mass., among those calling for such a move.

The emergency reserve is kept in salt caverns in Texas and Louisiana and contains about 700 million barrels of oil. There are 42 gallons in each barrel. Last year, as prices rose, Obama authorized the sale of 30 million barrels of oil from the reserve.

However, economists suggest that tapping the reserve to increase the amount of oil on the market has only a modest and temporary effect on gas prices.

Will Obama take that step? White House spokesman Jay Carney says, "We never take options off the table."

Obama may just have to get used to the criticism, because it probably isn't going away anytime soon, said James Thurber, an American University political science professor. "Republicans will hit him with anything that comes up which makes him look bad," he said.

Still, as long as the economy seems to keep improving, Obama probably won't be hurt too much by the attacks "unless gas goes over $5 a gallon," Thurber said.

___

Follow Tom Raum on Twitter: http://www.twitter.com/tomraum

View the original article here

Obama takes tougher stance on higher education

WASHINGTON (AP) — Access to college has been the driving force in federal higher education policy for decades. But the Obama administration is pushing a fundamental agenda shift that aggressively brings a new question into the debate: What are people getting for their money?

Students with loans are graduating on average with more than $25,000 in debt. The federal government pours $140 billion annually into federal grants and loans. Unemployment remains high, yet there are projected shortages in many industries with some high-tech companies already complaining about a lack of highly trained workers.

Meanwhile, literacy among college students has declined in the last decade, according to a commission convened during the George W. Bush administration that said American higher education has become "increasingly risk-averse, at times self-satisfied, and unduly expensive." About 40 percent of college students at four-year schools aren't graduating, and in two-year programs, only about 40 percent of students graduate or transfer, according to the policy and analysis group College Measures.

College drop-outs are expensive, and not just for the individual. About a fifth of full-time students who enroll at a community college do not return for a second year, costing taxpayers hundreds of millions of dollars annually, according to an analysis released last fall by the American Institutes for Research.

There's been a growing debate over whether post-secondary schools should be more transparent about the cost of an education and the success of graduates. President Barack Obama has weighed in with a strong "yes."

During his State of the Union address, Obama put the higher education on notice: "If you can't stop tuition from going up, the funding you get from taxpayers will go down," he said. "Higher education can't be a luxury— it's an economic imperative that every family in America should be able to afford."

He wants to slightly reduce federal aid for schools that don't control tuition costs and shift it to those that do. He also has proposed an $8 billion program to train community college students for high-growth industries that would provide financial incentives to programs that ensured their trainees find work. Both proposals need congressional approval.

At the same time, the administration is developing both a "scorecard" for use in comparing school statistics such as graduation rates as well as a "shopping sheet" students would receive from schools they applied to with estimates of how much debt they might graduate with and estimated future payments on student loans.

American's higher education system has long been the backbone of much of the nation's success, and there's no doubt that a college degree is valuable. It's now projected that students with a bachelor's degree will earn a million more dollars over their lifetime than students with only a high school diploma, Education Secretary Arne Duncan says.

But Obama's statement to Congress jolted the higher education establishment, which believes that college isn't just to create foot soldiers for industry and that the use of measured outcomes would hurt the humanities, meaning fewer students will turn to Shakespeare and instead study engineering, said Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University. The community has already been reeling over an earlier administration decision to require career college programs — many of which are at for-profit institutions — to better prepare students for "gainful employment" or risk losing federal aid.

"It's the notion that the ...federal government will begin to say we want to know what we're paying for and we want to make sure that people don't pay for education programs that take them nowhere, especially if the program is supposed to get them a job, we want it to get them a job, Carnevale said.

Some fear that Obama might want to apply the "gainful employment" standards to traditional four-year degree programs. Robert Moran, director of federal relations at the American Association of State Colleges and Universities, said reporting requires time and resources, and it's even more difficult to gauge the success of a graduate with an English degree than someone with a very specific career certificate.

Duncan said in an interview he doesn't see a big need to go in that direction now, although he does think it's important to track factors such as graduation rates and tuition costs. He said he tracked his graduates while serving as chief executive officer of the Chicago Public Schools and noticed that some universities were graduating them at rates of 75 percent or more, while others were graduating them at a small fraction of that.

"Colleges aren't too dissimilar to high schools. Some have done a great job building cultures around completion and obtainment and some haven't," Duncan said.

Historically, policy conversations have centered on getting students into college. Duncan said graduating is just as important.

"To be real clear, I think that's been the problem with federal policy in the past is 100 percent has been focused on the front end on inputs, that's clearly important, but that's the starting point. That gets you in the game. The goal isn't to get to the game, the goal is to get to the finish line," Duncan said.

Obama isn't the first president to encourage dialogue on making higher education more affordable and accountable. In addition to convening a commission to study higher education in America, Bush's administration issued grants to states to link transcript data with other records to better track the success of graduates from public institutions. The Obama administration has continued the program.

But Obama is taking the conversation to another level. That doesn't mean, however, he's abandoning the issue of accessibility. His administration has expanded the availability of Pell grants, supported a tax credit for tuition costs and is attempting to make it easier for some graduates to pay back loans.

Experts say some of the challenges in higher education result from too many students entering the doors without basic math and English skills. There's also the question of how to measure how effective colleges are and whether tuition increases are appropriate — especially for public institutions facing dramatic budget cuts.

Rep. Virginia Foxx, R-N.C., the former president of Mayland Community College, said the issues raised by Obama are being addressed at the state and local level, where she said they should be handled, and that many schools are coming up with innovative ways to cut costs and to find ways to work with local industry. As an example, she recalled developing, while a community college president, a course in supervisory training after local industry sought it.

"All of these things the president talks about can be done at the local and state level, and are being done at the local and state level," Foxx said. "It isn't the role of government to guarantee somebody a good job after they graduate from college or community college."

Sen. Ron Wyden, D-Ore., takes a different view.

"Right now, the information about the potential of various careers, the track records of colleges and the like is essentially strewn all over the countryside," said Wyden, who authored a bill on making college costs more transparent.

He added, "I think students and their parents are now saying in addition to accessibility, we want to wring the maximum value out of every dollar we're spending on education."

_____

Follow Kimberly Hefling on Twitter at http://twitter.com/khefling

_____

College Measures: http://collegemeasures.org/

American Institutes for Research: http://www.air.org/

Education Department: http://www.ed.gov/

American Association of State Colleges and Universities: http://www.aascu.org/

Rep. Virginia Foxx: http://foxx.house.gov/

Sen. Ron Wyden: http://wyden.senate.gov/

View the original article here

Obama takes tougher stance on higher education

WASHINGTON (AP) — Access to college has been the driving force in federal higher education policy for decades. But the Obama administration is pushing a fundamental agenda shift that aggressively brings a new question into the debate: What are people getting for their money?

Students with loans are graduating on average with more than $25,000 in debt. The federal government pours $140 billion annually into federal grants and loans. Unemployment remains high, yet there are projected shortages in many industries with some high-tech companies already complaining about a lack of highly trained workers.

Meanwhile, literacy among college students has declined in the last decade, according to a commission convened during the George W. Bush administration that said American higher education has become "increasingly risk-averse, at times self-satisfied, and unduly expensive." About 40 percent of college students at four-year schools aren't graduating, and in two-year programs, only about 40 percent of students graduate or transfer, according to the policy and analysis group College Measures.

College drop-outs are expensive, and not just for the individual. About a fifth of full-time students who enroll at a community college do not return for a second year, costing taxpayers hundreds of millions of dollars annually, according to an analysis released last fall by the American Institutes for Research.

There's been a growing debate over whether post-secondary schools should be more transparent about the cost of an education and the success of graduates. President Barack Obama has weighed in with a strong "yes."

During his State of the Union address, Obama put the higher education on notice: "If you can't stop tuition from going up, the funding you get from taxpayers will go down," he said. "Higher education can't be a luxury— it's an economic imperative that every family in America should be able to afford."

He wants to slightly reduce federal aid for schools that don't control tuition costs and shift it to those that do. He also has proposed an $8 billion program to train community college students for high-growth industries that would provide financial incentives to programs that ensured their trainees find work. Both proposals need congressional approval.

At the same time, the administration is developing both a "scorecard" for use in comparing school statistics such as graduation rates as well as a "shopping sheet" students would receive from schools they applied to with estimates of how much debt they might graduate with and estimated future payments on student loans.

American's higher education system has long been the backbone of much of the nation's success, and there's no doubt that a college degree is valuable. It's now projected that students with a bachelor's degree will earn a million more dollars over their lifetime than students with only a high school diploma, Education Secretary Arne Duncan says.

But Obama's statement to Congress jolted the higher education establishment, which believes that college isn't just to create foot soldiers for industry and that the use of measured outcomes would hurt the humanities, meaning fewer students will turn to Shakespeare and instead study engineering, said Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University. The community has already been reeling over an earlier administration decision to require career college programs — many of which are at for-profit institutions — to better prepare students for "gainful employment" or risk losing federal aid.

"It's the notion that the ...federal government will begin to say we want to know what we're paying for and we want to make sure that people don't pay for education programs that take them nowhere, especially if the program is supposed to get them a job, we want it to get them a job, Carnevale said.

Some fear that Obama might want to apply the "gainful employment" standards to traditional four-year degree programs. Robert Moran, director of federal relations at the American Association of State Colleges and Universities, said reporting requires time and resources, and it's even more difficult to gauge the success of a graduate with an English degree than someone with a very specific career certificate.

Duncan said in an interview he doesn't see a big need to go in that direction now, although he does think it's important to track factors such as graduation rates and tuition costs. He said he tracked his graduates while serving as chief executive officer of the Chicago Public Schools and noticed that some universities were graduating them at rates of 75 percent or more, while others were graduating them at a small fraction of that.

"Colleges aren't too dissimilar to high schools. Some have done a great job building cultures around completion and obtainment and some haven't," Duncan said.

Historically, policy conversations have centered on getting students into college. Duncan said graduating is just as important.

"To be real clear, I think that's been the problem with federal policy in the past is 100 percent has been focused on the front end on inputs, that's clearly important, but that's the starting point. That gets you in the game. The goal isn't to get to the game, the goal is to get to the finish line," Duncan said.

Obama isn't the first president to encourage dialogue on making higher education more affordable and accountable. In addition to convening a commission to study higher education in America, Bush's administration issued grants to states to link transcript data with other records to better track the success of graduates from public institutions. The Obama administration has continued the program.

But Obama is taking the conversation to another level. That doesn't mean, however, he's abandoning the issue of accessibility. His administration has expanded the availability of Pell grants, supported a tax credit for tuition costs and is attempting to make it easier for some graduates to pay back loans.

Experts say some of the challenges in higher education result from too many students entering the doors without basic math and English skills. There's also the question of how to measure how effective colleges are and whether tuition increases are appropriate — especially for public institutions facing dramatic budget cuts.

Rep. Virginia Foxx, R-N.C., the former president of Mayland Community College, said the issues raised by Obama are being addressed at the state and local level, where she said they should be handled, and that many schools are coming up with innovative ways to cut costs and to find ways to work with local industry. As an example, she recalled developing, while a community college president, a course in supervisory training after local industry sought it.

"All of these things the president talks about can be done at the local and state level, and are being done at the local and state level," Foxx said. "It isn't the role of government to guarantee somebody a good job after they graduate from college or community college."

Sen. Ron Wyden, D-Ore., takes a different view.

"Right now, the information about the potential of various careers, the track records of colleges and the like is essentially strewn all over the countryside," said Wyden, who authored a bill on making college costs more transparent.

He added, "I think students and their parents are now saying in addition to accessibility, we want to wring the maximum value out of every dollar we're spending on education."

_____

Follow Kimberly Hefling on Twitter at http://twitter.com/khefling

_____

College Measures: http://collegemeasures.org/

American Institutes for Research: http://www.air.org/

Education Department: http://www.ed.gov/

American Association of State Colleges and Universities: http://www.aascu.org/

Rep. Virginia Foxx: http://foxx.house.gov/

Sen. Ron Wyden: http://wyden.senate.gov/

View the original article here

Obama takes tougher stance on higher education

WASHINGTON (AP) — Access to college has been the driving force in federal higher education policy for decades. But the Obama administration is pushing a fundamental agenda shift that aggressively brings a new question into the debate: What are people getting for their money?

Students with loans are graduating on average with more than $25,000 in debt. The federal government pours $140 billion annually into federal grants and loans. Unemployment remains high, yet there are projected shortages in many industries with some high-tech companies already complaining about a lack of highly trained workers.

Meanwhile, literacy among college students has declined in the last decade, according to a commission convened during the George W. Bush administration that said American higher education has become "increasingly risk-averse, at times self-satisfied, and unduly expensive." About 40 percent of college students at four-year schools aren't graduating, and in two-year programs, only about 40 percent of students graduate or transfer, according to the policy and analysis group College Measures.

College drop-outs are expensive, and not just for the individual. About a fifth of full-time students who enroll at a community college do not return for a second year, costing taxpayers hundreds of millions of dollars annually, according to an analysis released last fall by the American Institutes for Research.

There's been a growing debate over whether post-secondary schools should be more transparent about the cost of an education and the success of graduates. President Barack Obama has weighed in with a strong "yes."

During his State of the Union address, Obama put the higher education on notice: "If you can't stop tuition from going up, the funding you get from taxpayers will go down," he said. "Higher education can't be a luxury— it's an economic imperative that every family in America should be able to afford."

He wants to slightly reduce federal aid for schools that don't control tuition costs and shift it to those that do. He also has proposed an $8 billion program to train community college students for high-growth industries that would provide financial incentives to programs that ensured their trainees find work. Both proposals need congressional approval.

At the same time, the administration is developing both a "scorecard" for use in comparing school statistics such as graduation rates as well as a "shopping sheet" students would receive from schools they applied to with estimates of how much debt they might graduate with and estimated future payments on student loans.

American's higher education system has long been the backbone of much of the nation's success, and there's no doubt that a college degree is valuable. It's now projected that students with a bachelor's degree will earn a million more dollars over their lifetime than students with only a high school diploma, Education Secretary Arne Duncan says.

But Obama's statement to Congress jolted the higher education establishment, which believes that college isn't just to create foot soldiers for industry and that the use of measured outcomes would hurt the humanities, meaning fewer students will turn to Shakespeare and instead study engineering, said Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University. The community has already been reeling over an earlier administration decision to require career college programs — many of which are at for-profit institutions — to better prepare students for "gainful employment" or risk losing federal aid.

"It's the notion that the ...federal government will begin to say we want to know what we're paying for and we want to make sure that people don't pay for education programs that take them nowhere, especially if the program is supposed to get them a job, we want it to get them a job, Carnevale said.

Some fear that Obama might want to apply the "gainful employment" standards to traditional four-year degree programs. Robert Moran, director of federal relations at the American Association of State Colleges and Universities, said reporting requires time and resources, and it's even more difficult to gauge the success of a graduate with an English degree than someone with a very specific career certificate.

Duncan said in an interview he doesn't see a big need to go in that direction now, although he does think it's important to track factors such as graduation rates and tuition costs. He said he tracked his graduates while serving as chief executive officer of the Chicago Public Schools and noticed that some universities were graduating them at rates of 75 percent or more, while others were graduating them at a small fraction of that.

"Colleges aren't too dissimilar to high schools. Some have done a great job building cultures around completion and obtainment and some haven't," Duncan said.

Historically, policy conversations have centered on getting students into college. Duncan said graduating is just as important.

"To be real clear, I think that's been the problem with federal policy in the past is 100 percent has been focused on the front end on inputs, that's clearly important, but that's the starting point. That gets you in the game. The goal isn't to get to the game, the goal is to get to the finish line," Duncan said.

Obama isn't the first president to encourage dialogue on making higher education more affordable and accountable. In addition to convening a commission to study higher education in America, Bush's administration issued grants to states to link transcript data with other records to better track the success of graduates from public institutions. The Obama administration has continued the program.

But Obama is taking the conversation to another level. That doesn't mean, however, he's abandoning the issue of accessibility. His administration has expanded the availability of Pell grants, supported a tax credit for tuition costs and is attempting to make it easier for some graduates to pay back loans.

Experts say some of the challenges in higher education result from too many students entering the doors without basic math and English skills. There's also the question of how to measure how effective colleges are and whether tuition increases are appropriate — especially for public institutions facing dramatic budget cuts.

Rep. Virginia Foxx, R-N.C., the former president of Mayland Community College, said the issues raised by Obama are being addressed at the state and local level, where she said they should be handled, and that many schools are coming up with innovative ways to cut costs and to find ways to work with local industry. As an example, she recalled developing, while a community college president, a course in supervisory training after local industry sought it.

"All of these things the president talks about can be done at the local and state level, and are being done at the local and state level," Foxx said. "It isn't the role of government to guarantee somebody a good job after they graduate from college or community college."

Sen. Ron Wyden, D-Ore., takes a different view.

"Right now, the information about the potential of various careers, the track records of colleges and the like is essentially strewn all over the countryside," said Wyden, who authored a bill on making college costs more transparent.

He added, "I think students and their parents are now saying in addition to accessibility, we want to wring the maximum value out of every dollar we're spending on education."

_____

Follow Kimberly Hefling on Twitter at http://twitter.com/khefling

_____

College Measures: http://collegemeasures.org/

American Institutes for Research: http://www.air.org/

Education Department: http://www.ed.gov/

American Association of State Colleges and Universities: http://www.aascu.org/

Rep. Virginia Foxx: http://foxx.house.gov/

Sen. Ron Wyden: http://wyden.senate.gov/

View the original article here

Obama takes tougher stance on higher education

WASHINGTON (AP) — Access to college has been the driving force in federal higher education policy for decades. But the Obama administration is pushing a fundamental agenda shift that aggressively brings a new question into the debate: What are people getting for their money?

Students with loans are graduating on average with more than $25,000 in debt. The federal government pours $140 billion annually into federal grants and loans. Unemployment remains high, yet there are projected shortages in many industries with some high-tech companies already complaining about a lack of highly trained workers.

Meanwhile, literacy among college students has declined in the last decade, according to a commission convened during the George W. Bush administration that said American higher education has become "increasingly risk-averse, at times self-satisfied, and unduly expensive." About 40 percent of college students at four-year schools aren't graduating, and in two-year programs, only about 40 percent of students graduate or transfer, according to the policy and analysis group College Measures.

College drop-outs are expensive, and not just for the individual. About a fifth of full-time students who enroll at a community college do not return for a second year, costing taxpayers hundreds of millions of dollars annually, according to an analysis released last fall by the American Institutes for Research.

There's been a growing debate over whether post-secondary schools should be more transparent about the cost of an education and the success of graduates. President Barack Obama has weighed in with a strong "yes."

During his State of the Union address, Obama put the higher education on notice: "If you can't stop tuition from going up, the funding you get from taxpayers will go down," he said. "Higher education can't be a luxury— it's an economic imperative that every family in America should be able to afford."

He wants to slightly reduce federal aid for schools that don't control tuition costs and shift it to those that do. He also has proposed an $8 billion program to train community college students for high-growth industries that would provide financial incentives to programs that ensured their trainees find work. Both proposals need congressional approval.

At the same time, the administration is developing both a "scorecard" for use in comparing school statistics such as graduation rates as well as a "shopping sheet" students would receive from schools they applied to with estimates of how much debt they might graduate with and estimated future payments on student loans.

American's higher education system has long been the backbone of much of the nation's success, and there's no doubt that a college degree is valuable. It's now projected that students with a bachelor's degree will earn a million more dollars over their lifetime than students with only a high school diploma, Education Secretary Arne Duncan says.

But Obama's statement to Congress jolted the higher education establishment, which believes that college isn't just to create foot soldiers for industry and that the use of measured outcomes would hurt the humanities, meaning fewer students will turn to Shakespeare and instead study engineering, said Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University. The community has already been reeling over an earlier administration decision to require career college programs — many of which are at for-profit institutions — to better prepare students for "gainful employment" or risk losing federal aid.

"It's the notion that the ...federal government will begin to say we want to know what we're paying for and we want to make sure that people don't pay for education programs that take them nowhere, especially if the program is supposed to get them a job, we want it to get them a job, Carnevale said.

Some fear that Obama might want to apply the "gainful employment" standards to traditional four-year degree programs. Robert Moran, director of federal relations at the American Association of State Colleges and Universities, said reporting requires time and resources, and it's even more difficult to gauge the success of a graduate with an English degree than someone with a very specific career certificate.

Duncan said in an interview he doesn't see a big need to go in that direction now, although he does think it's important to track factors such as graduation rates and tuition costs. He said he tracked his graduates while serving as chief executive officer of the Chicago Public Schools and noticed that some universities were graduating them at rates of 75 percent or more, while others were graduating them at a small fraction of that.

"Colleges aren't too dissimilar to high schools. Some have done a great job building cultures around completion and obtainment and some haven't," Duncan said.

Historically, policy conversations have centered on getting students into college. Duncan said graduating is just as important.

"To be real clear, I think that's been the problem with federal policy in the past is 100 percent has been focused on the front end on inputs, that's clearly important, but that's the starting point. That gets you in the game. The goal isn't to get to the game, the goal is to get to the finish line," Duncan said.

Obama isn't the first president to encourage dialogue on making higher education more affordable and accountable. In addition to convening a commission to study higher education in America, Bush's administration issued grants to states to link transcript data with other records to better track the success of graduates from public institutions. The Obama administration has continued the program.

But Obama is taking the conversation to another level. That doesn't mean, however, he's abandoning the issue of accessibility. His administration has expanded the availability of Pell grants, supported a tax credit for tuition costs and is attempting to make it easier for some graduates to pay back loans.

Experts say some of the challenges in higher education result from too many students entering the doors without basic math and English skills. There's also the question of how to measure how effective colleges are and whether tuition increases are appropriate — especially for public institutions facing dramatic budget cuts.

Rep. Virginia Foxx, R-N.C., the former president of Mayland Community College, said the issues raised by Obama are being addressed at the state and local level, where she said they should be handled, and that many schools are coming up with innovative ways to cut costs and to find ways to work with local industry. As an example, she recalled developing, while a community college president, a course in supervisory training after local industry sought it.

"All of these things the president talks about can be done at the local and state level, and are being done at the local and state level," Foxx said. "It isn't the role of government to guarantee somebody a good job after they graduate from college or community college."

Sen. Ron Wyden, D-Ore., takes a different view.

"Right now, the information about the potential of various careers, the track records of colleges and the like is essentially strewn all over the countryside," said Wyden, who authored a bill on making college costs more transparent.

He added, "I think students and their parents are now saying in addition to accessibility, we want to wring the maximum value out of every dollar we're spending on education."

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Follow Kimberly Hefling on Twitter at http://twitter.com/khefling

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College Measures: http://collegemeasures.org/

American Institutes for Research: http://www.air.org/

Education Department: http://www.ed.gov/

American Association of State Colleges and Universities: http://www.aascu.org/

Rep. Virginia Foxx: http://foxx.house.gov/

Sen. Ron Wyden: http://wyden.senate.gov/

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