A boon or a shuffle of benifits? tax break plan could change college choices

January 08, 1995|By David Folkenflik | David Folkenflik,Sun Staff Writer

President Clinton's proposal to offer relief to middle class taxpayers with children in college sounded like the best news private colleges have heard in a long time, but the plan has been met largely with hesitance rather than hurrahs.

That's because, like a child straining to hear the kerplunk of a stone dropped down a well, campus officials are awaiting the upshot. And they are not certain they will like it.

In a televised December address, President Clinton told the nation that families could deduct up to $10,000 in tuition and fees from their annual taxable income. The instant analysis: The plan should help pricey private colleges and middle-class families.

And yet. . . .

"You don't want to look a gift-horse in the mouth. Anything that puts money into the hands of families for tuition purposes only sounds good to me," said Robert H. Chambers, president of Western Maryland College in Westminster. "But a fear I have is that something could be done with one hand and taken away with another," he said.

"It's sort of a glass half full, a glass half empty," Reginald Wilson, senior scholar at the American Council on Education, said of the president's proposal. "We recognize that the deduction for children going to school is a positive sign. We also understand that the savings have to come from somewhere else."

That somewhere else, Dr. Wilson, Dr. Chambers and other campus officials said, may be the grant and loan programs that aid families at the lower end of the economic spectrum.

But David Longanecker, assistant U.S. secretary for higher education, ruled out that option. The $20 billion the program would cost in the next five years would come from announced but unspecified cuts in other agencies, he said.

The proposal, if passed by a Congress now in Republican hands, is intended to help lighten the debt burden on those middle-class families who do not qualify for other kinds of current federal programs. The $10,000 deduction, which would be phased in, is aimed at families that make up to $100,000, where it tapers off. Families whose adjusted gross income hits $120,000 would get no deduction.

An apparent beneficiary would be the smaller private colleges -- not so much the Harvards or the Johns Hopkinses of the world, colleges with cachet for which people are willing to pay. Those more likely to gain include schools such as Goucher, Hood and Mount St. Mary's Colleges, whose high tuition (compared to state schools) scares off many would-be students.

Many private colleges, particularly the elite ones, have suffered a "Manhattan effect," in which most students are wealthy, and therefore can afford exorbitant tuition, or low-income, and therefore get a free ride. At Western Maryland, about 60 percent of students receive some form of financial aid based on financial need, and another 20 percent receive aid based on other factors. The rest pay full price.

Mr. Clinton's plan aims to ease the middle class squeeze. But some experts believe, despite Dr. Longanecker's assurances, that assistance to low-income families would suffer and that the plan's unintended consequence would be to increase the trend of sorting students by class: Upper and upper-middle class students in privates, middle class students in the publics, and the lower class in the community colleges or trade schools.

"A parent who would have sent his kid to Stanford is sending his kid to the University of California at Berkeley, or the University of Michigan," the American Council on Education's Dr. Wilson said. "A parent who would have sent his kid to the University of Michigan is sending his kid to Wayne State or Cleveland State instead."

"What's happening as a consequence is that the schools are becoming more class-oriented. I don't blame that on Clinton policy," Dr. Wilson said, but added, "The Clinton policy exacerbates that."

Private colleges see attracting the upper-middle-class students as their salvation, a way to subsidize their lower-class undergraduates. Whatever its cause, tuition increases have averaged several points above inflation in the past decade, forcing financial aid budgets to grow steeply. Even at Maryland's public campuses, tuition has ballooned 114 percent in that time.

"We are increasingly in a dogfight with public institutions," Dr. Chambers said. "It's so damned expensive that financial aid is a nightmare. It doesn't appear to be controllable."

That's been compounded by a policy swing started by the Reagan administration from federal grants to loans, a move which burdens students with a "negative dowry" they have to repay in later years. That shift has been justified with the philosophy that those who gain most from the education should pay for it.

Mr. Clinton's proposal did not stem from educational philosophy but political pressure, part of the White House's response to the near-complete Republican sweep in national elections this fall, Dr. Longanecker said.

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