Democratic House may try to tackle high college costs

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November 17, 2006

12:23 AM

p. After capturing majorities in both the House and Senate, Democrats have voiced a willingness to increase funding for higher education. Congressional Democrats are pushing forward with a plan that they say will make college educations more affordable and accessible.

p. According to Nancy Pelosi (D-Ca.), who will become Speaker of the House in January, education has long been a part of the Democratic Party’s plan for reform. In an Oct. 27 letter, Pelosi said that if the Democrats gained control of the House, a plan to cut the interest rate in half for student loans would be a top issue to be addressed at the start of the 110th Congress.

p. According to the National Center for Education Statistics, the number of full-time College students increased 30 percent from 1994 to 2004. Higher education reform is a part of what Pelosi refers to as a “bipartisan and achievable plan” developed by Democrats to address national issues such as health care, gas prices coupled with energy independence and retirement security.

p. “Democrats stand for increasing the minimum wage, for making college more affordable, for bringing down the cost of health care and for finding meaningful solutions to our energy crisis. Democrats stand for a new direction,” Senate Majority Leader Harry Reid (D-NV) said in an article on his party’s Senate website.

p. Plans to cut college costs include making college tuition deductible from taxes, expanding the federal Pell Grants and lowering student loan interest rates.

p. The Democrats’ plan would bring back tax deductions for families who earn up to $160,000 per year, The Wall Street Journal reported Nov. 15.

p. According to the Wall Street Journal, the College Board, the company that administers the SAT, found that over the past five years, the cost of public education has increased 35 percent while the real value of the Pell Grant for lower income families has fallen.
p. Democrats in Congress say that they hope to raise the Pell Grant from $4,050 a year to $5,100. Taking rising inflation and cost of living into account, the Pell Grant is worth $900 less than it was in 1975. In 1976 the federal grant for college students covered approximately 72 percent of the tuition for a four-year institution, while today’s grant covers 32 percent of those costs. More than five million students receive aid from the Pell Grant, which does not have to be paid back.

p. Since the 2000 to 2001 fiscal year, average annual tuition and fees at public colleges have jumped 57 percent. At private colleges, annual tuition and fees have increased 32 percent.
“[Neither] student-aid funds nor family incomes are keeping pace with college prices,” College Board President Gaston Caperton told The Wall Street Journal Oct. 25.

p. If Pelosi gets what she wants, the package would include cutting the cost of student loan interest rates in half from 6.8 percent to 3.4 percent, and parent loan interest rates from 8.5 percent to 4.25 percent. The Wall Street Journal reported Nov. 15 that this could save students as much as $4,000 total.

p. The Democrats’ plan also includes creating a tax credit for college tuition that is the equivalent of a $12,000 tax deduction for middle-income families. This tax credit would cover 55 percent of the average tuition and fees at a four-year public college, a large increase from the status quo, which covers, at most, 30 percent.
The introduction of such initiatives in the new Congress could cause discord between the parties.

p. “If Republicans had liked these ideas, they would have implemented them, so they are likely to oppose them. Democrats who are worried about the size of the deficit … will oppose them,” Professor Robert Archibald, who teaches the Economics of Higher Education course at the College, said.

p. Congress will begin its 110th session on Jan. 3, 2007.

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