It is a budget proposal overshadowed by lingering economic woes and paralyzing partisan debates over deficits, tax breaks for the rich, and future investments. Still, the president found room for five key higher education changes, as The Huffington Post summarized.

• Obama unveiled the Community College to Career Fund which would invest $8 billion over the next three years to fuel partnerships between community colleges and employers. Administered by the departments of Education and Labor, the initiative would aim to train 2 million workers for "middle-skill" positions in high-growth industries such as healthcare and advanced manufacturing. Georgetown University economists have noted that about one-third of workers with an associate degree earn higher wages than peers with a bachelor’s degree, and one-fourth of workers with a one-year certificate earn more than peers with a bachelor’s. The president's plan would exclude for-profit colleges from this type of funding, which Inside Higher Education noted, "almost guaranteed to draw protest from a sector that already feels persecuted by the Obama administration."

* The proposed budget would increase funding for Pell Grants for low-income students and ask Congress to stop an interest-rate hike on student loans that was scheduled to go into effect.

• As the president promised in his State of the Union address, the plan would change the formula to distribute so-called "campus-based aid"—Supplemental Educational Opportunity Grants (SEOG), Perkins Loans and Federal Work-Study funds—to reward institutions for enrolling and graduating relatively higher numbers of lower-income (Pell Grant-eligible) students, offering relatively lower net tuition prices and restraining tuition growth.

• A new $5 billion grant program would help schools attract, train and retain high-quality teachers. Governing magazine opined that "the reforms would include making colleges of education more selective, improving professional development programs, tying pay to performance and revamping tenure standards."

• Information Week reported that the White House proposed $140.8 billion for R&D. The proposed federal portfolio of basic and applied research is $64 billion, an increase of 3.3%, over what was spent last year—and the proposal for non-defense R&D is $64.9 billion, a 5% boost. The budget also provides $3 billion to science, technology, engineering and mathematics (STEM) education.

For more details of the president's proposed budget for higher education, see The Chronicle of Higher Education.

In the rancorous times, Obama's proposals were met, of course, with both praise and criticism.

The criticism ranged from a reader comment to The Huffington Post: "Why is the federal government even involved in funding education? They have no constitutional mandate to regulate or fund education. They only education the federal government should be funding is for federal employee training, troops via the GI bill, and research projects done at universiti­es. Part of the reason education costs have spiraled out of control is that universiti­es became so dependent on outside funding."

To the wonkishly thoughtful: The University of New Hampshire's daily The New Hampshire editorialized, "On the surface, UNH would be at a disadvantage compared to other schools, since it receives such miniscule financial support from the state. New Hampshire already had the lowest per-capita spending on higher education before the state legislature cut the expenditure by 50%  last year. A federal program that failed to take this fact into its algorithm would only further UNH's disadvantage and make it harder for the university to remain competitive."

The first proposal would connect $10 billion in annual federal "campus-based" financial aid to colleges' efforts to contain tuition costs, enroll and graduate a substantial number of low-income students, and “provide good value” to students. Providing good value would include a “quality education and training that prepares graduates to obtain employment and repay their loans,” which echoes the goals of the Education Department’s gainful employment regulations, which were codified last July. The federal assistance at play under President Obama’s proposal would include an expanded Perkins Loans pool of about $8 billion, Supplemental Educational Opportunity Grants, and Federal Work-Study support. The new federal aid formula would reward colleges which “do their fair share” to keep net tuition costs down with a greater share of the aid funding pool, while those that don’t would receive “little or no campus aid.”

New Competitive Grant Programs

· The new Race to the Top: College Affordability and Completion program will be modeled after the U.S. Education Department’s Race to the Top grant program for K-12 schools and states. Under the College Affordability and Completion model, states will compete for a share of the initial $1 billion pool by submitting plans to contain tuition costs and facilitate degree completion across their higher education system. The president hopes this will incentivize maintaining support for higher education as states deal with budget difficulties. Whether state will have to undertake policy changes before applying for the grant money, as in the K-12 Race to the Top, has not been made clear.

· The $55 million First in the World competition will support public and private colleges and nonprofit organizations that develop and scale up effective strategies to improve instruction and student outcomes. The program would provide modest startup money for programs which lead to larger, long-term increases in productivity, including better use of technology and preparation strategies to reduce the need for remediation.

Information Disclosure for Prospective Students

A College Scorecard created by the administration would make it easier for prospective students to compare all degree-granting institutions based on price, financial aid, and graduation and earnings outcomes. In addition, the Financial Aid Shopping Sheet, announced as a voluntary tool to help families compare financial aid packages last October, would become mandatory for all colleges.

Implementation

The proposals which affect student financial aid will require congressional approval to implement. Additionally, the president charged Congress to enact several policies to make college more affordable:

· Maintain low interest rates for student loans to reduce borrowers’ future debt loads (the Stafford loan rate is scheduled to double from 3.4% to 6.8% this summer);

· Make permanent the American Opportunity Tax Credit, which was scheduled to expire in 2012; and

· Double the number of Federal Work-Study jobs available over the next five years.

Administration officials acknowledged that the current initiative plans are broad overviews, and said that more details will be included with the president’s FY2013 budget proposal.

As a member of New England Council, we publish the DC Shuttle each week featuring higher ed news from Washington. This edition is drawn from the Council's Higher Ed Committee Update of Jan. 30, 2012.

Founded in 1925, the New England Council is a nonpartisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the New England region. The Council's mission is to identify and support federal public policies and articulate the voice of its membership regionally and nationally on important issues facing New England. For more information, please visit: www.newenglandcouncil.com.