Easing Families' Tuition Shock
Clinton tax proposals would mean major saving for many students
The student in my office was worried. Her father's business was in trouble, and she was not sure there would be enough money to pay for her senior year. Did I think she should drop out and get a job? Or would she be better off transferring to a city college near her home? Fortunately, her worst fears were never realized. At the eleventh hour her grandparents came through and helped pay her final year's tuition.
I hear more and more such stories from my students. For all but the most well-off families, paying for college has become an ordeal. No matter how carefully they have planned, it doesn't take much to throw off their calculations. Even with the aid of scholarships and loans, they have been pushed to the financial breaking point. It is no coincidence that the federal government's current population survey shows that for families with annual incomes over $67,000 the proportion of graduates from a four-year college is 80 percent, while for families with incomes of $22,000 to $67,000 the proportion of college-bound students is just 20 percent.
In the face of this gap and the growing alarm over the cost of higher education, President Clinton's new proposals to make college more affordable could not be more timely. They won't solve our current educational problems, but their combination of tax relief and saving incentives will provide substantial help, especially for middle-income parents whose sons and daughters don't qualify for the larger scholarships reserved for the very poor.
At the heart of the Clinton plan are four key proposals designed to benefit college students and families with incomes of $100,000 and less. They include a tax credit of up to $1,500 a year, a figure slightly more than the average tuition at community colleges across the country, for the first two years of college; an annual $10,000 tax deduction (to be used in place of the $1,500 credit) that would primarily cover students in four-year colleges; the right to make penalty-free educational withdrawals from IRA accounts; and an increase in Pell Grants, which would raise the amount a needy student could receive each year from $2,700 to $3,000.
Impact on 20 million family budgets
A surprisingly large number of students would be affected by one or more of the Clinton proposals. Government estimates show the $1,500 tax credit could help 4.2 million students, the $10,000 tax deduction 8.1 million students, Pell Grants 3.6 million students, and IRA withdrawals children of 20 million families. The difference these proposals could make would be significant. Tax experts note that the $10,000 tax deduction would make a major change to the finances of a family in the 28 percent bracket.
Take the case of Mary, a student from a single-parent family whose mother earns $30,000 a year. In the past, Mary's mother would have paid $2,850 a year in taxes. Under the Clinton plan she will pay only $1,350 in taxes - a $1,500 saving that adds up to $6,000 over four years. Mary's classmate Bill, whose two-parent family has an annual income of $60,000, which must be used for both Bill and his high-school-age brother, also benefits. In the past, the tax for Bill's family would have been $6,855. Under the Clinton plan they pay $4,965 - a saving of $1,890 annually - $7,560 over four years.
Mary's and Bill's families are still going to have to scrimp. But the relief from these tax proposals could make a nice dent in tuition or would more than pay for books and travel to and from school.
What astonishes me, however, is that instead of drawing widespread support, the president's measured approach to lessening the burden of paying for college has been attacked from the left and the right. From the left, he has been accused of not proposing the kind of systematic reform that would make college readily accessible to the poorest families. From the right, he has been charged with offering an education plan that will only encourage colleges to raise their fees to take advantage of the additional money available.
Where critics, left and right, err
Both criticisms ignore history. The first assumes that in this budget-conscious decade broad educational finance reform would not elicit the same kind of opposition the president's health care plan incurred during the first administration. The second assumes that colleges operate like businesses and try to maximize their income, when in fact the opposite is the case. Colleges are in financial trouble because, unlike businesses, they make a point of seeking customers (students) who cannot pay in full for the product (education) they receive.
At the college where I teach, the percentage of students receiving financial aid has gone from a third to over a half in less than a decade. We are not exceptional. Like no other institution in American society, colleges are committed to diversity, reaching out to low-income and minority students who in the past were excluded from higher education. And colleges have not, like businesses, been able to pare costs by massive downsizing. Serious teaching is by its nature labor intensive. A college cannot economize simply by packing more students into bigger lectures. For students to learn, part of their education must come from classes small enough for professors to know them, read their papers, and have time to meet with them.
A half-century ago, in initiating the G.I. Bill and democratizing access to higher education, the nation acted on the belief that it owed a special debt to the vets who fought World War II. In the 1990s we may not owe the young what we owed the soldiers of World War II, but if we want them to get a fair start in life, we need to make sure they get the best education possible. Today the war we have to worry about is a global, economic one in which the country, without a well-educated citizenry, is sure to be a loser.
As much as in the 1940s, it is in our self-interest to make sure qualified students make it through college. The average college graduate earns approximately double what a counterpart with only a high school education does, and the gap grows as the economy becomes more technically advanced. What we spend now on our students should be more than offset by the future taxes they pay and the wealth they help generate. The Clinton administration's educational proposals are in the best sense an investment, not an entitlement.
* Nicolaus Mills, professor of American Studies at Sarah Lawrence College in Bronxville, N.Y., is author of the forthcoming "The Triumph of Meanness: America's War Against Its Better Self" (Houghton Mifflin).