Welcome, everyone, to Treasury. I want to thank the members of the Financial Literacy Education Commission for their hard work, and I also want to thank Secretary Arne Duncan and Director Rich Cordray, who is Vice Chair of the Commission, for joining us today.
As President Obama has made clear--the surest path to a growing economy is a growing middle class. But the problem is, for more than a decade, trends have been at work in our economy undermining what it means to be middle class. It is imperative that we do what we can to reverse these trends. And that brings me to what today is all about--higher education.
One of the clearest ways to grow and strengthen the middle class is to expand access to higher education. Workers who get an education beyond high school are more likely to be employed, earn higher wages, and rise up the economic ladder.
Research by Treasury and the Education Department has found that for children in middle class families, earning a college degree increases the likelihood of upward income mobility by more than 75 percent. Viewed another way, people with at least a four-year college degree earn more than twice as much as those who do not have a high school diploma.
So getting a higher education--whether it is a technical certificate or a four-year degree--is critical in today's economy.
Yet as important as higher education is, the cost of it has never been greater.
The average tuition at a public four-year college has increased by 250 percent over the last 30 years. But incomes for most families grew by only 16 percent during that same period. While the recent study published by the College Board suggests that college cost increases are moderating, still more needs to be done.
This means that a lot of young people are missing out on a college education simply because they cannot pay for it. This is especially true for students from low- and middle-income families. Cost, in fact, is keeping many of those who are in poverty from getting the most effective tool for climbing out of it.
Now, over the past four years, this Administration has taken steps to make college more affordable. We lowered the interest rates on student loans.
We reformed the student loan system to eliminate bank subsidies and channel those savings directly to students. We increased the maximum Pell Grant award by more than $900. We created the American Opportunity Tax Credit to make college more affordable for millions of students and families. And we made it possible for many borrowers to cap their student loan repayments at 10 percent of their monthly income.
It is critical that students know about these policies, and among other things, Treasury has been working with the Education Department and agencies across the Administration to get the word out about their repayment options.
Nevertheless, the skyrocketing cost of tuition continues to put higher education out of reach for those who need it most. It is also saddling young people with massive student loan debt. The average borrower now graduates owing more than $26,000. This debt is hampering our economy by keeping young people from buying homes, creating businesses, and saving for retirement. At the same time, loan default rates are rising.
That is why President Obama has put forward new initiatives to make it easier for families and students to afford a higher education.
These initiatives offer practical solutions to this problem, and in a few moments, Secretary Duncan will speak about them in more detail. They include the creation of a new ratings system for colleges and universities. This ratings system will soon measure schools according to the value they provide so students and families can make the most of their money. In addition, the President is working to encourage schools to come up with innovative ways--like expanding online course offerings--to lower costs.
On top of all that, the President is pushing colleges and universities to help students make smart financial decisions.
That means giving students--through counseling, web sites, and even the tax filing process--a stronger grasp of their student loan options, their debt obligations, and their personal finances. We want young people to be better informed so they can manage their expenses, save for the future, and achieve their financial and personal goals. And later you will hear from experts who are making this happen.
I am glad we are here today to find ways to make it easier to get a higher education. This work is extremely important. It will open up new doors of opportunity so more Americans can find better jobs, start new businesses, and continue to drive American innovation.
Our country has prospered because it has always been a place where you can turn grit and determination into a brighter future. This is the country America has always been--and this is what America can and always should be.