“I think higher education doesn’t win elections, but no candidate wants to be accused of ignoring the issue of college access. It is important to have something in your list of policies that is relatively catchy, simple and credible.”
Robert Shireman, president of the Institute for College Access and Success, as quoted in insidehighereducation.com
I described in an earlier post (Price and Cost in Higher Education: price and the political-economic system, Jan 11, 2007)some of the political forces that make higher education access an increasingly important priority of government. I also noted that this powerful trend had to be accommodate within the reality that shrinking federal resources preclude additional government outlays to increase access. My earlier post described some of the approaches being proposed to accomplish both of these ends. One of these approaches, championed by Republican Rep. “Buck” McKeon, called for penalties for colleges whose tuition increases exceeded the CPI increase by some amount- caps on tuition increases, in effect.
Now that the Democrats have taken over the Congress, I have been awaiting the Democratic alternatives for solving this problem. It is now beginning to take shape. The Chronicle of Higher Education headline captures this bold new Democratic thinking:
Congress Looks to Expand Tuition Tax Credits, May Tax Higher Education to Cover Costs
The article says that Senator Max Baucus, Chairman of the Senate Finance Committee, reportedly has stated that he intends to pay for increased tuition tax credits by changing tax benefits of colleges. Among the new taxes being considered are those that focus on education benefits to university employees, and endowment returns relating to offshore hedge funds. These ideas seem to me to lack the direct cause-and-effect simplicity of McKeon’s idea, thus failing Shireman’s critera for political benefit. However – another idea being considered is a phase -out of tax free financing for institutions who do not keep their tuition increases within some parameters, and that is simply a defining of the penalties called for by McKeon’s original plan.
Increased access is gained in one set of approaches by limiting tuition increases, in other approaches by allowing tuitions to rise but taxing the university’s cash flow in order to recycle part of the increases back to students and their families. Thus the Democrats and the Republicans really see eye-to-eye on one set of approaches for increasing access -- cap the increases in net revenues that higher education will be allowed to capture through tuition increases.
While these approaches may not make their way into law this year or next, the fact that both Democratic and Republican leaders are considering very similar approaches to access should send a very strong signal to the higher education community that the days in which tuition increases can greatly exceed the CPI increase are drawing to a close. It is time to begin to think seriously about ways to significantly restructure costs.
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