NY Republican Rep. Releases Plan to Lower Cost of College
“We must use all available tools to make sure college is affordable and accessible”
Rep. Tom Reed of New York has released a plan intended to help stem the rising cost of college and it’s not bad.
The Hill reports:
GOP lawmaker releases plan to control college costs
Rep. Tom Reed (R-N.Y.) on Monday unveiled a blueprint that describes steps Congress could take to reduce college costs.
“We must use all available tools to make sure college is affordable and accessible,” said Reed, a member of the House Ways and Means Committee and a vice chair of Donald Trump’s transition team. “That’s why our proposal forces colleges to be transparent about how they are spending tuition dollars.”
The blueprint, called “Our Vision for Students,” describes upcoming legislation from Reed that he intends to introduce in the future.
One of these bills would require college with endowments of more than $1 billion to spend at least 25 percent of the endowments’ investment gains on lowering the cost of college for middle-class families. Colleges that didn’t do so would immediately have their investment income subject to a 30 percent tax, and the tax rate could increase to 100 percent if the violations persisted.
Another proposal would require colleges to disclose more information about perks provided to administrators and the schools’ investments.
A third bill Reed intends to introduce would require colleges to submit cost-containment plans to the Department of Education. Schools that are able to keep cost increases below inflation could be rewarded, and schools that don’t meet their goals would be penalized.
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CHANGE, we can get behind.
I’m ok with changes to the use of Endowment funds since they enjoy tax advantage privileges. And, it is ok to have disclosure of administrative costs – heck the government requires disclosure about lots of financial stuff for business so that investors can make informed decisions. Why not disclose the cost components of your tuition bill (teaching salaries, administrative costs, etc).
But, I’m not sure I want the Ed Dept involved with cost cutting. If the school is private, then that is interfering with a business. Would we expect the government to tell a hotel they have to cut expenses or else? And what would be the penalties and what would be the reward? More important – what if they cut out the teaching element in order to save the administrative bloat.
If the school is in the state education system, then I think it is up to the state and its taxpayers to question the cost. In Oklahoma, the voters turned down a 1% sales tax to fund education. It was advertised as giving a $5,000 pay raise to school teachers, but once you did the math, the K-12 systems got 69% of the funds and the university system received almost 20%. The only use that was defined was the teacher raise, so it was seen as a slush fund for everything else – the dollars didn’t pass the smell test.
However, the government can impact the cost by cutting out many of the research grants to universities. The government can cut out some of the regulations and I am sure there are many other administrative cost cutting that can come from the government side.
State Tax regulations are separate from the exempt taxing authority of Federal I.R.S.. Endowment funding (donors) may not be exempt, but the earnings on endowment investments are. Why the proposed legislation would be specific to the $1Billion investment thresh with 25% ($250 Million) dedicated and structured to applying those gains to lowering the college fees to those caught in the middle where student loans have been pushed as a means end benefitting the provider over the student. I would go further and make it aggregate of all endowments and not specific to “schools within schools”.
This should only be an opening, as colleges and universities should have to monetarily answer for the tuitions they accept via government loan funding process vs the number who go on to earn a diploma. There should be some ‘buyers remorse’ by the schools for continuing to accept funds via loans for students who are not succeeding. If they have ‘skin in the game’, they would more likely initiate a remedy or a alternate path to accomplish what the next new generation will need that cannot be done with a high school diploma.
Want to lower the cost of college? Don’t subsidize it with government funding, including grants and loans.