Q: It seems there’s no end in sight when it comes to rising college costs. What can be done?
A: The fact is, college tuition is growing at a rate faster than inflation and it continues to rise. If the price of milk had climbed at the pace of college tuition since 1980, a gallon of milk would cost $15 today. Parents and students are struggling to pay for college, and more and more students face higher debt loads after graduation. Taxpayer-subsidized student aid is hard-pressed to keep pace and can even have the negative effect of helping to increase college costs. In recent years, I’ve worked to enact tax relief policies to help individuals and their families with higher education expenses, including creating the tax deduction for tuition and making the tax deductibility of interest on student loans a permanent part of the tax code. As Chairman of the Senate Committee on Finance in 2001, I also worked to establish federal tax advantages for the college savings plans known as 529 plans. I was able to secure permanent status for these tax policies in 2006 and help expand confidence and participation in this great college savings tool for families. Iowa’s 529 program, College Savings Iowa, is one of the nation’s best with more than $2 billion invested. For more information on College Savings Iowa, visit www.collegesavingsiowa.com.
Q: What’s all the talk about college endowments?
A: More needs to be done to make college affordable, and something’s not right when tuition heads sky high alongside college endowment funds. In fact, billion-dollar tax-free endowments should help mean affordable education for more students rather than only a security blanket for colleges. Tax-exempt status means there’s a public benefit, so it only makes sense that university endowments be used for education. Universities exist to educate, and endowments provide tremendous opportunities to educate more students. I started a discussion in Congress last fall about a five-percent payout requirement for endowments, which is the same thing Congress requires for private foundations, and those foundations have had no trouble thriving and growing. It’s nice to see the drumbeat on endowments paying dividends. Dartmouth, Harvard and Yale have announced their own initiatives for using endowment dollars to help lower tuition for students. They’ve set a great example for other endowed colleges and universities, and their leadership can have a ripple effect across the country. I recently wrote directly to the 136 colleges in the United States with $500 million or more in endowments to find out how they are using large sums of money for student aid. University trustees and board members should look at their endowment policies and see what can be done to increase access to college with lower tuition. A reform-minded view is especially needed among school leaders where endowments are $500 million and higher. I look forward to Congress taking up this issue this year. Making sure that tax-exempt status means a public benefit is being provided is good tax policy. Putting downward pressure on tuition overall is good education policy. Educating the next generation is vital to America’s long-term economic and national security interests. For individuals, earning a higher education is a gateway to the American dream.