CONGRESSIONAL RECORD -- SENATE

June 1, 1967

Page 14445

TUITION TAX CREDIT

Mr. MUSKIE. Mr. President, a statement by President H. Edwin Young, of the University of Maine, presents a clear and concise picture of the tuition tax credit proposal. President Young's statement reflects the views of the majority of professional educators in Maine, and I believe will be of interest to Senators. I ask unanimous consent that Dr. Young's statement be printed in the RECORD.

There being no objection, the statement was ordered to be printed in the RECORD, as follows:

AN ARGUMENT AGAINST TAR CREDITS IN HIGHER EDUCATION

(By H. Edwin Young)

As I discuss tax credits and higher education, I want to convey some of my concerns and some of the goals that I want to see satisfied, as educators continue to evolve the American system of higher education.

First, I'm a strong believer in a pluralistic higher education system. America must continue to have both publicly and privately controlled colleges and universities; there is a need for some institutions of traditional excellence, to which only students of great promise are admitted, and there must be other institutions, in which students who have not demonstrated high achievement will have a chance to prove themselves.

Efforts must also be continued to bring an increasing percentage of the children of low income families into schools until people are convinced that family economic status is not an important determinant of college attendance. (Some educators are quite aware that there are other factors than ability to finance an education; however, there is no evidence that raising the price of tuition will encourage more applicants to attend institutions of higher education.) The American system should encourage scholarships for students who demonstrate high promise, but there must also be opportunities for students who are poor, whose backgrounds did not make them good competitors, to make their way.

Because of increasing numbers of students, competition for faculty (often a by-product of numbers), alternative opportunities, and improved quality of instruction, costs continue to rise. and particularly for those institutions which are trying to spread a relatively fixed endowment over a large number of students the problem becomes very real.

There has been the suggestion of a scheme of tax credits that would allow people buying tuition to deduct a part of the cost of that tuition from their federal taxes. Another way of saying it is to say that if one's income were large enough he could appropriate from the United States Treasury part of the cost of tuition, if he were paying tuition. Approximately $1 billion a year would either be pocketed by those who qualified, or transferred by higher tuition rates to the colleges, or used in some combination of these ways. If tuition rates are not raised, it is hard to see how colleges would benefit from this plan. The plan might become a program for the relief of middle-income families with students in college -- a peculiar way to write tax legislation.

If the tuitions rise, one can foresee the result that students whose families do not pay enough taxes will find the economic barriers to college raised. To say that such people all get scholarships is certainly not true. In fact, the good scholarships do not go to the lowest economic groups. Perhaps private institutions of higher education could have a scholarship system under which tuition would be calculated at a flat price plus tax saving to the family. But I don't think this idea is feasible.

I foresee another result of the tax credit plan for education. Publicly controlled schools in which tuition is kept low by legislative appropriation would undoubtedly be under great pressure to take advantage of the tax credit by raising tuition and thus creating a further barrier to students whose parents have low incomes. I view the raising of tuition in the public colleges and universities as a very serious matter, for I believe that low tuition is the best possible form of scholarship. Low tuition requires so little administration, so few invidious comparisons, so little concern about family status, advantages, or disadvantages, that in a way it helps to make up for the nature of some of the nation's scholarship competition.

My negative approach to the tax credit idea does not solve the problem of the school that does not have access to legislative appropriations. Increasingly, ways have been found to help institutions with research support, facilities, equipment, and so forth. More recently. assistance to students has allowed private schools to raise their fees rather substantially. In the period 1956-57 to 1964-65, tuition and required fees at private institutions of higher education rose from 28 percent to 37 percent of the per capita disposable income, which was rising from $1,743 to $2,268 -- a rise from $495 to $831.

Loans under the National Defense Student Loan Program have been important aids to students, and now there are grants, work-study programs, and interest-free loans. It has been estimated that families who could benefit most from the tax credit proposal can benefit more from the loan program. These families can benefit, and so can the student who cannot get benefits himself, or through his family, under the tax credit program.

It seems to me that the recent enactments of the Congress in the form of student aids are more beneficial to students and to the schools than the tax credit scheme, and educators ought to be glad to forget a scheme that as a national fiscal policy seems unwise and unfair, a scheme that could set precedents for the distortion of the American tax system, and a scheme that would invite expansion into areas other than education. The scheme has a very dubious relationship to the American principle of ability to pay. It provides for a method of bypassing the appropriating authority of Congress and yet may in the long run cause Congress to look closely at the way in which privately controlled institutions of higher education set their fees.