As my colleagues have written, a little known story about President Obama’s higher education legacy was the priority he placed on substantially boosting financial aid during a time of economic recession. Not only did these investments help families get by during hard financial times, they also helped improve college access while maintaining college affordability.
First is the story around access. Minority students, in particular, have greatly benefitted from Obama-era investments. Their immediate college enrollment after high school, for example, has increased 20 percent since Obama has taken office. The cumulative number of new Black students enrolled has increased by 300,000 students (a net 12 percent increase) and by 400,000 students for new Latino students (a net 26 percent increase). All told, this represents a grand total of more than 700,000 more minority students going straight to college after high school. These numbers are important because as research has shown, going to college immediately after high school results in much greater chances of college completion.
States and colleges had no exception to facing hard economic times, and as a result, sticker prices rose sharply. Recognizing the need to help families immediately, Obama invested heavily in grant aid and higher education tax benefits through the Recovery Act. Combined with expanded levels of institutional financial aid, the net price – the price students must pay out of pocket after scholarships and grants – ultimately stayed mostly flat. As a result, the college affordability story is that prices were able to stay steady during a period of economic turmoil. That’s a remarkable feat in and of itself.
Similarly, student debt management indicators have also held steady during the years where the economic downtown resulting from the financial crisis bottomed.
The percentage of on-time active repayment for Direct Loan borrowers consistently remained higher than 50 percent over the eight quarters between the end of 2013 and beginning of 2015. The percentage of Direct Loan borrowers who were more than three months late in making loan payments stayed steady at 10 percent. Direct Loan borrowers in forbearance also remained steady at 12 percent.
Finally, the number of borrowers who defaulted on their federal student loans within three years of entering repayment remained fairly stable from 13.4 percent in 2009 to 13.7 percent in 2011.
As with net prices, these relatively positive (or neutral) student loan management indicators came despite a slow economic recovery. One likely reason may stem from President Obama’s aggressive outreach campaigns for various income-based repayment plans that had 2.2 million federal student loan borrowers enrolled at the end of 2014.
The impacts of the Obama-era investments in higher education have proven that our federal government can and should continue to make investments in student financial aid. It’s clear that higher levels of financial assistance can have an impact on access and affordability, especially with skyrocketing college prices and rising demand for a college degree.
The deeper legacy, however, resides in Obama’s attempted use of new resources to push for higher education reform. As Secretary Duncan discussed in his speech yesterday, conversations about access can’t stop at affordability – it must also extend to student success. We look forward to learning what the Obama Administration has in store for its final years, and we hope the next President will incorporate a platform of resources and reform to make an even bigger impact.
For more details on Obama’s legacy in pairing resources to reform and the 45th President’s challenge, read our new report.