OBAMA: All right. We're ready? OK.
CUOMO: All right. Let's begin with why you're here in Syracuse, why you're doing this particular bus tour what do you believe you can do to help lower the cost of college and give families who are struggling a chance to afford an education?
OBAMA: Well, first of all, you know, for the last month, I've been talking about the need for us to build a strong middle class and ladders of opportunity into the middle class. And nobody disputes that a higher education -- in some form, two-year, four-year, technical college -- is a necessity in a 21st century knowledge-based economy. And we've already done a lot over the last four years to increase Pell Grants, we changed the system so that money wasn't going through banks, and we saved billions of dollars that allowed millions of students to get a better deal on their financial aid from the federal level.
But when you have over the last decade or so tuition going up 260 percent and family incomes are going up 16 percent, that's unsustainable. So a couple of things we're going to do. Number one, we want to create a new system of ratings for colleges so that parents and students know what schools graduate kids on time, are a good value for the money, lead to good jobs, because, right now, the rating systems -- the commercial rating systems tend to just focus on what's the most selective school or the most expensive school or has the nicest sports facilities.
The second thing we want to do is to work with colleges who are doing some really interesting things to figure out, how do you reduce costs? Can you help young people graduate a little faster so that they are measured by what they're learning, as opposed to how many hours they're sitting in a classroom? Can we use online learning more effectively?
And then the third thing we want to do is to build on something we've already done, which is to try to help students manage their debt. We've got a program right now where you never have to pay more than 10 percent of your income in -- if, for example, you want to become a teacher, we want to expand that to more students, advertise it more so that young people understand they don't have to defer their dreams if, in fact, they want to pursue a profession that may not make a lot of money, but still requires a lot of training.
CUOMO: There's no question that the key to it is cost. The numbers of your own, income 16 percent, college education costs are going up by well over 200 percent.
CUOMO: How do you make them stop when they hold all of the cards?Because they charge what they charge because they can get it, right, Mr. President.
OBAMA: Well, when you look at public colleges and universities, part of what's happened is state legislatures have dropped their support and so the universities, rather than thinking about how do we save money and do more with less, they just pass on automatically the costs to students. And we've got to put some pressure on state legislatures- if you are serious about training a great work force in your state, then you've got to invest in state universities and colleges and not just invest in prisons, which is part of what we did over a long period of time. But there's no doubt that schools can do better. We know, because there are schools out there that are doing better. You know, I visited a school, Central Missouri University, where they've gotten arrangement with the local high schools, community colleges that allow young people to start accruing credits. By the time they get to school, not only are they graduating faster, debt-free, but they also have a job at the end of it.
So we know that there are ways of doing this. What we need to do is just spread the word. And we want college presidents and we want, you know, board of trustees and stuff to be thinking about this.
Now, one last element to it. Once we develop the rating systems, part of what we're going to argue to Congress is that we should tie in some way the way federal financial aid flows to schools that are doing really well on this, and not so much on schools that aren't. So if a school has a higher default rate than it does a graduation rate, then we should give them a chance to improve, but ultimately we don't want kids saddled with debt. We want them to actually get a degree and to be able to get a good job.
CUOMO: Now, leaving the cliche of the dysfunction of Congress out of it for a second, because that's assumed in the equation these days, there is what most recently happened. Many complain about the negotiated fix on student loans, that it actually puts students in a worse situation than they were before. Why should students feel and families feel that they're going to be taken care of, when Congress just tied them to a rate that's higher than just about any other lending?
OBAMA: Well, actually, that's not true now, Chris. What happened was that the student interest rate had doubled. And what we were able to do was to negotiate it so it was back down to a low level. Now, what's true is, as interest rates go up because it's now tied to market interest rates, that could push the interest rate higher.
And that's why it's important for us to continue to act. That was in some ways a stop-gap measure. What we now need to do is to make sure that we are dealing with the underlying costs.
You know, the problem we've got right now is, is that on -- when it comes to liberals, they've tended to say, "Let's just give more money to the system and increase student loans and grants and aid," and then, you know, you've got some on the right who've said, "Money doesn't matter, and young people should be able to figure it out on their own."
And what we're saying is, no, we should provide more help to young people. Government shouldn't be in the job of profiting from students who need to go to college. But we should also expect something from the colleges, which is they're controlling their costs better, and we should expect something from the students. One of the problems we've found is, is that a lot of students, because in part they're not well-informed, they're taking out a lot of loans, but they're not thinking through how fast they need to graduate, they never graduate, and they can't pay back the loans. That means the taxpayer is getting stuck and the young person is no better off than they would have been. They're worse off.
CUOMO: True. But when we say it's a priority -- that's where you're going to say this matters this most, this is the new reality for our economy as what you know...
CUOMO: ... you then tie it to the Treasury rate. You make sure that students are going to borrow at a rate that's much higher than banks get, right, because our government is effectively allowing banks to loan our money to whomever they want and borrow themselves at about 0 percent. They're going to borrow, these students, at almost twice the rate of a home mortgage. Why not make this the new home mortgage, treat it like that, get the rates lower so that the students don't pay the most, more than banks, more than homeowners?
OBAMA: Well, as I said, Chris, actually right now, because of the deal that was cut, they're not going to be borrowing at a higher rate than our mortgage. That had happened because Congress hadn't acted...
OBAMA: ... because they hadn't done anything. Now, the key here to understand, though, is that the student interest rate needs to stay low, but if you're borrowing $100,000 and you're a teacher and you're making $35,000, then whether the interest rate is 3.5 percent or the interest rate is at 6 percent...
CUOMO: You're underwater.
OBAMA: ... you're going to be underwater. So what we need to do is to figure out, how can you come out with less debt in the first place and keep those interest rates low? And that is achievable, but to do that, everybody is going to have to work together. The colleges are going to have to do a better job. State legislatures have to put money where they say their priorities are. And we're going to need to make sure that students are thinking and parents are thinking in terms of, what gives them good value for the money they're spending. And that means we have to give them better information than we're giving them right now.