U.S. Secretary of Education Margaret Spellings today gave the following keynote address at the San Jose State University State Founder's Day celebration in San Jose, California:

First off, I want to extend my congratulations to the entire community here at San Jose State University on your 150th anniversary. In an age of dot-coms, 24-hour news cycles, and instant messaging, you can be proud of a rich 150-year history. Based on what I've seen of the energy and life on this campus, you'll be adding new distinctions to the history books for a long time.

This is a school that has not only done a great job educating students, but a school that has a proud history of educating educators. You were founded as a teacher's college and you continue to have a strong education department today with over 12,000 alumni working both here and abroad.

So, congratulations and thank you for letting me be part of your Founders Day events. I'm honored to be here.

Founders Day and the 150th anniversary of this great university are an appropriate backdrop to discuss the future of higher education in America. SJSU is an example of the great strength of U.S. higher education, and a university that has evolved successfully with changing times.

When it comes to higher education reform, many people wonder why we're talking about it at all. Given the historic strength of America's colleges and universities, what's all the fuss about?

The truth is, our system of higher education faces some serious challenges in the years ahead. We continue to see glaring inequities in educational opportunity that too often break down along racial and socioeconomic lines. A college education is getting more expensive and less accessible at a moment when the new global economy requires a more educated workforce.

Issues of affordability, accessibility, and accountability threaten the preeminence of our nation's higher ed system. And many of our colleges and universities, confident in past successes, are not adequately prepared for the gathering storm.

The challenges are complex, the stakes are high, and the reasons we must act are compelling. I want to discuss them in two broad categories: the moral imperative and the economic imperative.

Both should concern every American.

The moral imperative begins by considering the value of education itself. It's much deeper than earning potential and building human capital. Education is what it takes to lead fuller lives and contribute to our nation and world.

Higher education in particular affords students the opportunities to explore history, debate important issues, and discover their passions and potential.

Our founders understood how important education is to the idea of America as a just, equitable, and productive society. A nation of educated individuals is more likely to strengthen the institutions they rely upon, from government to business to our schools.

But access to opportunities in higher education remains uneven at best. And the problem begins in our K-12 system.

Consider imbalances in graduation rates. 15 percent of our high schools produce half of our dropouts, and these schools are disproportionately in low-income areas with mostly minority students. Nationally, one of every two African American and Hispanic students drops out of high school.

Of the 40,000 students who failed the mandatory high school exit exam last year in California, more than half do not return and of course earn no diploma. These tens of thousands of young Californians face a future without the advantages graduates will draw upon every day.

In addition to epidemic dropout rates, rapidly rising tuition costs mean that many lower-income students do not even consider attending college. And many who are lucky enough to attend begin their careers saddled with debt.

On top of the high price tag, a general lack of accountability and transparency at colleges and universities often makes it difficult for consumers to know what they're getting for their investment.

If we are a nation dedicated to equality, we cannot be satisfied with the status quo. Helping more students make it to college and succeed there is a morally urgent challenge.

And the economic case is equally compelling.

Not long ago, you could make a pretty good living by the sweat of your brow, but with technology and globalization shifting workplace demands, that time has past.

Increasingly, the output of our businesses, industries, and our nation is conceptual—not nuts and bolts, but services and ideas. And our trades now require more knowledge of math and greater levels of literacy.

You live here in the heart of innovation, so I don't need to tell you that 90 percent of our fastest growing jobs require post-secondary education.

Silicon Valley is bursting with businesses that are revolutionizing technology... but nearly every time I meet with CEOs and business leaders, they tell me that they are not getting the talent they need.

This problem also starts in our early grades and in high school. In addition to the epidemic dropout rates I mentioned before, only half of those who graduate are prepared for college level math and science.

We need to instill more rigor into our nation's classrooms and strengthen math and science instruction. We all know that students who take a rigorous curriculum are far more likely to make it to college and succeed there, but access to challenging courses can be hard to come by in low-income neighborhoods.

These imbalances can be seen in your area. Henry M. Gunn High School in Palo Alto Unified School District offers around 20 AP classes, while other nearby schools offer as few as 6.

Nearly 40% of our nation's high schools offer no AP classes at all. This often isn't about students failing to succeed in challenging environments; it's about schools failing to challenge them in the first place.

Lack of preparation for college-level work has serious consequences. Nationally, the average earnings of a college graduate are almost forty percent higher than those of a high school graduate.

High school dropouts forfeit a million dollars in lifetime earnings compared to their college graduate peers.

Here in California, median wages for students who earn certificates or degrees from community colleges are more than double those of students with only a high school diploma.

High school dropouts cost our nation $260 billion in lost wages, taxes, and productivity over their lifetimes, a shocking figure.

In this new globalized world, the pace of innovation requires that we tap into the potential and talents of all our citizens. I have traveled to countries like China, Japan, Korea, and India, and I've seen a deep hunger for education that is often missing in our classrooms and communities. America, and Santa Clara County, can take advantage of the shrinking, wired world, but not without education and not without that similar hunger for learning.

This area is among the most diverse and multilingual places in the country. Your school district teaches English to students speaking more than 40 languages.

This diversity of languages, cultures, and skills has been an asset for the region—connecting the people of Santa Clara County to cities and business opportunities all over the world.

But education must remain the foundation of all this progress and innovation. In California, test scores for English language learners have been relatively flat compared with other groups, and here, as in other parts of the country, literacy is a pressing problem.

If we don't act to help these students succeed in school and make it to college, we will risk becoming a divided nation of those who have access to the opportunities of the 21st century, and those who do not.

The solutions to nearly every challenge on our horizon, from energy concerns to workforce productivity to global competition, start with education.

So, what are we going to do about it? Improving higher education will require the cooperation of government, business, and of course, colleges and universities, and my Department is doing its part.

To tackle the pressing problems of accessibility, affordability, and accountability in post-secondary education, I convened my Commission on the Future of Higher Education in 2005.

The Commission's final report last September included recommendations to increase access to higher ed, make college more affordable, and infuse accountability into the system.

In terms of accessibility, we must have schools better align their courses with college and workplace needs; have states report more accurate graduation rates; and encourage learning in science and math as well as expand access to Advanced Placement courses.

On accountability, we must expect more information and transparency from higher education institutions. That means putting information—like the value-added by colleges and universities and future employment prospects—in the hands of students and parents.

To start the momentum, we recently announced a three state volunteer pilot program in which Florida, Minnesota, and Kentucky will make more data available to students and parents. States like New Mexico, North Carolina, Arizona, and Texas are already at work in this area.

Finally, on affordability, we must work to simplify the financial aid process and provide more need-based aid. I'm proud that the President's budget called for the largest Pell grant increase in over 30 years—raising the grant to $4,600 next year and increasing to $5,400 over the next five years.

We have also developed a new online tool called the FAFSA4caster to help reduce some of the uncertainty about college costs and help families plan earlier.

Federal aid is just one part of the equation, and we must work with states and institutions to help make college more affordable.

Californians can be proud that your system of higher education has been a leader in everything from affordability to access. Your commitment to affordable education and good work to facilitate transfers from community colleges are two reasons that California is a model for other states to follow.

I want to mention in particular the good work that Charlie Reed has done on higher education. He's been a great contributor to my Commission and has helped pioneer strategies like CSU's early assessment program, which is revolutionizing the way students prepare for college in California. You're lucky to have him.

For much of the history of this fine university, Silicon Valley was referred to as The Valley of the Heart's Delight for its productive orchards and agriculture. The valley transformed itself to become the center of technological progress and innovation.

It's time for higher education to undergo a similar transformation, and this valley can continue to be a driver of change.

The conversation on higher education reform is ongoing—in fact, you'll be continuing the conversation in just a few minutes when the panel begins. I want to thank those of you who are helping to lead the charge on this vital set of issues—as members of the higher education community your leadership role is critical.

We all share a moral responsibility to help our nation's students achieve their potential in the classroom. This is the promise of America: every student achieving—not based on their geography or family income—but according to the limits of their abilities and dreams.

I mentioned before that, in terms of cultural and linguistic diversity, San Jose State University looks like the future of our country. I hope this campus also reflects how seriously America will take expanding opportunities in higher education in the years ahead.

Thank you, and here's to another 150 years!

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