Private Sector Role Is At Heart Of Campaigns’ Split On College Costs

WASHINGTON — Ballots cast in November will help decide how the federal government confronts the costs of college and what role the private sector plays in higher education.

Both President Obama and Mitt Romney tell students and families that they understand the financial strain caused by soaring tuition and swelling student debt, but they offer vastly different solutions to the problem.

If re-elected, Mr. Obama says he will try to defend the Pell Grant program from budget cuts and make sure that the amount of the grants increases as scheduled next year. He would work to extend a tax credit, set to expire in January, that gives individuals and families a tax break of up to $10,000 over four years of college. Mr. Obama would also push a proposal that would link some federal aid to colleges’ success in curbing tuition increases.

In a second term, Mr. Obama would continue a crackdown on for-profit colleges that was begun after investigations concluded that many of them were charging high tuition while producing low graduation rates and inadequately preparing those who did graduate for the workplace. The administration has already barred for-profit schools from tying bonuses for recruiters to the number of students they enroll.

Mr. Romney’s policy proposals for higher education reflect his desire to reduce federal spending to address budget deficits and to shift more government functions to the private sector.

A Romney education adviser, Scott Fleming, said that in his first year as president, Mr. Romney would work to make financial aid available for students who “need it most.” The implication is that eligibility criteria would tighten and assistance would be available to fewer students.

Mr. Romney’s running mate, Representative Paul D. Ryan of Wisconsin, is the author of the House’s 2013 budget proposal, which would freeze the maximum Pell grant at the current amount, $5,500, for a decade, reduce the number of recipients and let the tuition tax credit expire.

Mr. Fleming said that Mr. Romney would also try to remove what he considers incentives in the federal financial aid system that encourage institutions to raise tuition. In addition, private lenders and banks — rather than the government — would return to issuing federally subsidized college loans.

Mr. Fleming also said that Mr. Romney would act quickly to eliminate the Education Department’s “gainful employment” rule for college career programs. The regulation, introduced last year with for-profit colleges as the primary target, withholds grants and loans from institutions that do not provide training and credentials that translate to a “recognizable” profession. It also says that a college can qualify for more federal money only if at least 35 percent of its former students are repaying their loans, and it says that students’ annual loan repayments cannot exceed 12 percent of their earnings.

The federal government’s role in providing access to college and regulating institutions has evolved over the years. In 1965, President Lyndon B. Johnson’s Great Society programs included the first version of the Higher Education Act, which is responsible for the grant-centered approach to financing higher education. The act, which expires at the end of next year, created the Basic Educational Opportunity Grant, later renamed in honor of Senator Claiborne Pell, Democrat of Rhode Island. Both of the next two presidents, the Republicans Richard M. Nixon and Gerald R. Ford, faced Democratic supermajorities in Congress and continued to increase federal spending on higher education.

At the time Jimmy Carter took office in 1977, the basic Pell grant covered more than 70 percent of the cost of attending a public four-year college, which averaged $2,145 a year, according to the National Center for Education Statistics. In 2011, the grants covered less than a third of the costs at these schools, where the average cost of tuition, room and board had climbed to almost $16,000.

Republicans opposed the 1979 law that established the Education Department but were helpless to stop Mr. Carter and the Democratic majorities in Congress. The government’s role in higher education was a target of conservatives during President Ronald Reagan’s two terms, which started during a recession and included a Republican majority in the Senate for the first time since the 1950s. Federal support for grants leveled off amid huge public spending cuts, and the volume of student loans started climbing as students and families borrowed more.

With the Senate and the House under Republican control in President Bill Clinton’s second term, Pell grants were frozen at $4,500 a year from 1997 to 2000.

The maximum grant was increased under President George W. Bush and the Republican majorities in the House and the Senate, but it was reduced in 2003 to $4,050, where it remained until 2007. After winning a House majority in 2006, Democrats set their sights on increasing financial aid and lowering interest rates on loans. Mr. Bush’s 2008 budget again increased the amount of Pell grants — a move viewed as a response to pressure from Congress. He also signed a measure that lowered interest rates on loans and cut subsidies to private loan companies.

Most of Mr. Obama’s efforts on college affordability occurred in the first two years of his presidency, before the Republicans took control of the House in the 2010 elections. Democrats praise Mr. Obama for increasing and expanding federal financial aid, establishing the supremacy of federal direct loans while pushing aside what he has called middleman lenders and banks, keeping interest rates on loans low, restructuring repayments and taking a tough regulatory stance on for-profit colleges. Some Democrats also criticized the administration for eliminating Pell grants for summer courses.

Republicans, of course, grade the president’s record more harshly.

Mr. Romney argues that the president has perpetuated a cycle in which colleges raise tuition prices and expect the government to foot the bill with extra aid.

Many educators and other higher education experts say that a cut in federal financial aid would increase the burden on students and families in the short term, and that there is no hard evidence that it would curb tuition increases down the road. Research shows a positive correlation between need-based aid like the Pell grant and college completion.

But Mr. Obama and Mr. Romney have similar views in some aspects of their higher education platforms.

Both acknowledge that a traditional four-year degree is not the only successful route. Both point to the benefits of vocational training. Both candidates also seem to agree that students and families should have comprehensive, transparent information about the cost and value of college so they can “shop around,” as Mr. Romney put it.

And both men’s platforms do not address several root causes of high tuition increases, like diminished state financing to public institutions, which are attended by 80 percent of college students, and big spending by institutions competing for more prestige.

The proportion of public colleges’ revenue from states was 38.3 percent in 1991 but fell to 24.4 percent by 2008, according to a report from Demos, a policy group in New York. State higher education financing declined by 7.6 percent last school year, the biggest drop in at least 50 years.


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