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Higher education bill draws a bead on tuition costs

Legislation aims to point out colleges where costs are rising most, pushing states to pony up.

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States' education spending targeted

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To push states to do their part, the law requires that their higher education funding each year be at least as much as their previous five-year average (excluding capital and research and development). Such "maintenance of effort" provisions are common in K-12, but this sets a new precedent in higher education, Mr. Hartle says.

As the federal government increases student aid, "states should not see that as an opportunity to take their own funding out at the bottom," says Rachel Racusen, spokeswoman for the House Education and Labor Committee. Last fall, Congress provided about $20 billion in federal aid for students over the next five years.

The state-funding requirement has drawn resistance from some in Congress and groups such as the National Governors Association and State Higher Education Executive Officers (SHEEO). "We don't think it is an appropriate role for the federal government to be sanctioning states on educational policy," says SHEEO president Paul Lingenfelter.

On average, state and local funding for higher ed was fairly generous in 2006 and 2007, outpacing enrollment growth and inflation, SHEEO reports. But since the 1990s, tuition paid by students and their families has made up a bigger share of public education dollars.

Several experts say the maintenance of effort rule is unlikely to have much influence on state decisionmakers, who stand to lose only some yet-to-be-funded federal matching grants to help low-income students earn college degrees.

"It's by no means enough to tip the scales against the pressures the states are under that are causing them to cut funding for higher ed," says Jane Wellman of the Delta Project on Postsecondary Education Costs, Productivity, and Accountability, a nonprofit in Washington.

The law's transparency measures are helpful, Ms. Wellman says, but "the deeper problem is the cost structures.... [The focus should be on] whether the institutions are in fact spending more money."

States' biggest chunk of discretionary spending is the higher education budget, so when revenues drop lawmakers tend to cut funding to public colleges and raise tuition rates.

When the price students pay shoots up, the public often blames universities for overspending, but many do a good job of managing costs, Wellman says. For instance, the sticker price at four-year public research universities went up nearly 46 percent between 1999 and 2005, but the amount they spent to educate each student rose by just 0.2 percent, the Delta Project reported in May.

The new higher-ed bill: what ground it covers

The Higher Education Opportunity Act of 2008, nearly 1,200 pages long, addresses everything from simplifying the federal aid application to developing campus safety plans. Highlights include the following:

• Student loans: Bans gifts and revenue sharing between lenders and schools; provides borrowers with more information about federal and private loan options.

• Public service jobs: Forgives up to $10,000 in loans for graduates who work in law enforcement, nursing, education, firefighting, public-defender law, and other such fields.

• Access and support: Boosts funds for graduate programs at historically black, predominately black, and Hispanic-serving institutions; expands financial aid and services for students with disabilities.

• Veterans: Creates new scholarships for members of the military and their families.

• Workforce needs: Sets up collaborations with businesses and others to encourage the study of science, technology, and critical foreign languages; improves teacher training and recruitment in such fields.