Considering Government-Funded Tuition
by Fawn Johnson
National Journal
May 7, 2012

It should come as no surprise that the sleeper issue of student loan interest rates took on a life of its own as soon as President Obama began touting it. People are worried about paying for college. Tuition has more than doubled over the past 20 years, and Pell Grants are offsetting the lowest share of college costs in history.

Maybe it’s time for the government–state, local, even federal–to step up and pay. Obama hinted at this concept last Friday. “Some of it is not actually the fault of the universities,” he told a group of students and parents. “If it’s a state school, the state legislatures across the country have been cutting back on the support for public colleges and universities.”

Need-based student loans, which are set to double on July 1, are just the jumping off point for a broader conversation about college costs. As I wrote in National Journal last week, a typical financing plan for a low-income student includes a Pell Grant, a subsidized loan, and often a supplementary unsubsidized loan. Some colleges reduce tuition based on a student’s financial need, but state budget cuts have hurt public universities so much that those scholarships barely help.

There are a host of tax breaks aimed at helping middle-class families pay for college, but a recent report from the Education Sector notes that tuition tax breaks in recent years have gone to households with much higher incomes. Maybe it’s time to let those tax breaks go and use the money for Pell Grants, the paper provocatively argues.

Student loan interest rates or Pell Grant levels only dance around the heart of the problem–tuition is rising and wages are stagnant. If higher education is truly a priority for the country, should the taxpayers commit to making it happen? Should the states dramatically increase funding to public universities and community colleges? Should local governments be chipping in? Should the federal government subsidize post-secondary education more than it currently does? Would government subsidies, even substantial ones, simply make it easier for universities to charge more?

Response — Three Fs: Food, Frats, and Facilities
by Jeanne Allen

In this day and age of blamelessness, every problem is ascribed to anyone but those with whom it originates. So I should not be shocked that the President is suggesting that sky-rocketing tuitions are not entirely the fault of the institutions that set them (and buy the food, the people, the facilities, and the like) but instead of is the fault of states that don’t support the institutions that buy the food, the people, the facilities and the like.

Skyrocketing costs with little accountability is nothing new in higher education. I spent four years in the US Department of Education’s Office of Postsecondary Education nearly 25 years ago and this topic was as big then as it is now. It was very well publicized, and the response by then Secretary of Education Bill Bennett was to suggest that higher education take a hard look at costs. He implored universities to start controlling costs and to not expect the federal government to raise its support levels every time a school broke ground on a new building or and chose not to dip into endowments for that new arts center it “needed.” Bennett questioned whether America’s college kids were getting the education that all that money represented, and was trounced for doing so. That Education Department also attacked loan defaults, suggested aid be tied to accountability for results (what a concept) and all sorts of other things that are well documented in the history books.

From a personal standpoint, I have now spent the better part of the last five years negotiating college choices for four kids and been privy to the choices of ten times that many more of their friends. I’m shocked (as they’d say in Casablanca) as what masquerades as good education in many of the schools who cry poverty. Parties, football, fraternities, fitness facilities and food are the most important aspects of the choices kids are making today. These are their differentiators for 90% of the college bound who will draw considerably from the federal and state aid packages we fund in this nation, not whether their political science department can teach or their science department will advance them into truly exceptional realms of understanding.

College done well need not be a luxury item. But as long as the colleges feel the have to compete for students on the non-academic differentiators, they will continue to spend aimlessly, and raise their prices, knowing that sympathetic ears in Washington will support them in the name of education for all. The middle class is hardly helped by this — instead they are indebting their children and their own pensions to pay for this, along with whatever aid they can beg and borrow from our government backed lending institutions. And the less advantaged among us are thus deterred, unless they have advocates at their schools helping them find aid and great bargains in schooling, as is the case, for example, with Friendship Public Charter Schools graduates who are going to college in droves, heavily subsidized by their chosen institutions and by generous scholarships.

The answer is not — as legislators even a generation ago on Capitol Hill thought — to raise the aid available. The answer is to pressure higher education to lower costs and stop relying on taxpayers to pay for them regardless of their effectiveness. In a time when technology is playing an increasing effective role in delivering education K-12, why don’t traditional colleges and universities engage in blended learning models as well? The for-profit institutions that are doing precisely that continue to get battered by lawmakers, despite their service to kids who are not able to pay for expensive four-year institutions. They deliver education at a fraction of the price and their quality is comparable to that of most others, regardless of tax status.

Instead of isolating those doing it well for less, and continuing to push for increasing financial support for traditional colleges and universities, it’s time for America to draw the line on what and how much it will pay for education. Increasing Pell Grants and the like doesn’t open up the market to more students, it increases the cost of education and further distances this as a dream for all!

Freeze the loans and Pell grants as is, but give middle and lower-middle income families tax-credits so that they can make better decisions about what’s worth the cost of admission. Give US business tax incentives to fund scholarships for those with little or no income to spend on college, so that colleges and universities can vie for the business and become truly competitive. That’s when we’ll solve the financial higher education crisis we have today.