Opinion: Clarion Call

Call. 18: House Budget Poses Gains for Higher Education

House Budget Poses Gains for Higher Education

This year’s House budget proposal of $13 million includes tremendous gains for higher education, including millions more for community colleges. The full House is expected to vote on the budget this week. Below are the highlights of budget changes for higher education:

Universities:

* Graduate and undergraduate tuition increases: $7.8 million.
* Increase tuition grants for state students at private colleges: $4 million.
* Improvements to underused campuses: $10 million.
* Technology improvements: $10 million.
* Funds to reward excellent teaching: $7 million.
* Allow research campuses to retain overhead receipts: $3.5 million.

Community Colleges:

* Need-based financial aid: $5 million.
* Additional 2 percent pay increase for faculty: $7.1 million.

Federal Direct Student Loan Program Gets Failing Grade

The federal direct student loan program wastes millions of dollars in taxpayers’ money, according to a new report by the U.S. Department of Education’s inspector general. The government pays more to run the program than it receives in revenues, costing taxpayers $100 million a year. While private-sector student loans cost $13 each to administer, government loans cost $17. Satisfaction rate among schools for the federal program is also low – 71 percent for the federal program compared to 84 percent for private loans. The federal direct student loan program was begun by the Clinton Adminstration in the early 1990s in order to reduce ways that private lenders could gain money at the expense of taxpayers and the public. The adminstration believed that the government could increase student aid and cut down on adminstrative costs by bypassing local lending institutions, in favor of a “direct” loaning process.

Unfortunately, the opposite has happened and there appears to be no end in sight. The Education Department has requested a 17 percent increase in funding for the federal direct loan program. Unfortunately, the federal direct loan program does not address the real reason for rising costs to attend colleges and universities – government-backed financing, said John Hood, president of the John Locke Foundation. “Government-backed financing creates enormous incentives for colleges and universities to inflate their outlays so they can get at this steady source of revenues,” Hood wrote in 1993, before the creation of the federal loan system. “In fact, by making government financing more widely available, as program proponents suggest, the cost-spending cycle will only by reinforced: Tuition will become unaffordable for more and more students, forcing more to rely on federal help.”