College Costs

By Art Hauptman

Current arrangements for providing financial support to college students and their families in this country are not meeting many of the objectives for which they were intended. The Spellings Commission summed it up well in its final report: "The entire financial aid system - including federal, state, institutional, and private programs - is confusing, complex, inefficient, duplicative, and frequently does not direct aid to students who truly need it." As a result, the Commission and a number of other groups with wide ranging political agendas have recommended that "the entire student financial system be restructured". But what would that entail?

Since first established in the 1960s, the federal student aid programs of grants, loans, and work-study - in concert with state, institutional, and private efforts - have provided access to a postsecondary education for millions of Americans who otherwise might not have had enough funds to attend. More recently, federal tax offsets against current tuition expenses and tax-preferred incentives for college savings serve as an important source of financial relief for hard-pressed taxpayers from a range of incomes who worry that they will be unable to pay the constantly mounting bill for tuition and other expenses.

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Falling state support for higher education has a number of onerous effects: increased tuition and fees, more student debt, and a greater likelihood of scaring away low-income students. Less examined is that lost state revenue has driven many public universities and state colleges to find new and previously untapped funding sources - even ones that have dangerous repercussions for their students.

Despite nearly a half decade of solid economic growth, aggregate state support of higher education funding has fallen by 7.8 percent over the past five years in real terms. But the average obscures the wide variability among states. For example, in states such as Alabama, Hawaii, and Wyoming, appropriations per full-time student increased by at least 20 percent. The flipside, of course, is that states such as Colorado, Minnesota, and Vermont all have seen their appropriations decrease by 25 percent or more.

Public colleges typically react to funding cuts by hiking tuition. This certainly has occurred - overall tuition revenue per student at state colleges has risen 24 percent over the past half decade, according to a recent report by the State Higher Education Executive Officers.

As Congress works to finalize legislation to reauthorize the Higher Education Act for the next five years, higher education lobbyists are making one last ditch effort to dissuade lawmakers from requiring colleges to provide even the most basic information about how they spend their own institutional financial aid dollars.

At issue are provisions in both the House and Senate reauthorization bills that aim to provide prospective students, their families, and policymakers with more detailed data about their aid policies, as well as other types of consumer information, such as graduation and retention rates. Both bills ask colleges to report the average amount of grant aid that the institutions award their students and the proportion of students who receive these grants. The House legislation goes a much-needed step further, and requires colleges to provide a breakdown by income of students who receive institutional aid.

The two bills also differ on how this consumer information is to be reported. Under the House measure, colleges would be required to provide the data to the Education Secretary who would then publish it on the U.S. Education Department's College Navigator website, which the agency hopes prospective students will use when picking colleges. In contrast, the consumer reporting provisions in the Senate bill would be completely voluntary. Colleges that chose to participate would publish the information on their websites, using a model form developed by the Education Department.

Behind closed doors, Members of Congress are battling over a key concept in the pending Higher Education Act reauthorization -- a House of Representatives generated requirement that states maintain steady fiscal support for higher education. Not only should Congress ensure this concept makes it through to President Bush’s desk, it should strengthen the requirement to make it more than a toothless accountability measure.

In Kansas Governor Kathleen Sebelius's Democratic response to President Bush’s final State of the Union Speech Monday night, she touted a new law to “reduce the costs of college loans” as one of the major accomplishments of the new Democratic Majority in Congress. She was referring to enactment of the College Cost Reduction and Access Act of 2007, which among other things reduces interest rates on federally subsidized student loans. It was a big pat on the back for Congressional Democrats, who made cutting student loan interest rates in half a central part of their 2006 campaign. But Democrats should be careful not to oversell their achievement, as very few borrowers will get the full interest rate cut promised.

To be fair, under the new law, borrowers will also benefit from increased loan forgiveness for work in public service, substantially increased Pell Grant aid, and a decreased financial aid penalty associated with student work and savings. Indeed, the new law represents a significant increase in federal student aid. Higher Ed Watch has lauded it in the past.

In October and again in November, we warned that Congress might try to cut the Pell Grant program for low-income college students. We argued that after passing a new law in September that rightly whacked excess student loan bank subsidies to increase Pell Grant funding, Congress might later…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Yesterday, a key Congressional education committee took a groundbreaking albeit modest step on a top flight concern of parents and students - ever escalating college tuition.

For years, the federal government's main role in higher education finance has been to…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

Bush to Sign Reconciliation Bill

As Higher Ed Watch predicted, President Bush has dropped his threat to veto legislation Congressional Democrats finalized this week that would slash lender subsidies, cut the interest rate on federally subsidized student…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.

The U.S. News & World Report's annual ranking of colleges and universities, "America's Best Colleges 2008," was published last week with typical fanfare. High school students and their parents likely flipped immediately to the "top schools" ranking, where they found-gasp!-that Princeton University earned the top spot…

Note: This post pre-dates Higher Ed Watch's shift to a new publishing system. For the complete original post, including any comments, please click here.