US politicians take aim at soaring fees

November 7, 2003

The US Congress is launching an assault on universities in a bid to get them to keep down their costs.

Republicans in the House of Representatives have filed a bill that would block universities from participating in federal student-aid programmes if they raise tuition fees by more than twice the rate of inflation for two years in a row, which most do routinely.

Democrats in the House want to penalise states that cut higher education spending by making students in those states ineligible for $15 billion (Pounds 8.8 billion) of proposed increases in federal financial aid.

In the Senate, negotiations have begun to extend the Higher Education Act, the multi-year measure that governs all federal financial aid.

"Our nation is grappling with a college cost crisis that is threatening to push higher education out of reach for low and middle-income students," said Republican congressman Howard McKeon of California.

The bill that Mr McKeon introduced in the House would institute what he calls an "affordability in higher education index", which would be used to penalise universities that break the rules on tuition fees.

More than 1,300 of the 1,800 US universities and colleges have raised their prices by at least twice the rate of inflation in the past three years, and many have been doing so for much longer. This year, tuition at public universities rose by an average of 14 per cent and at private four-year universities by 6 per cent. The inflation rate was about 2 per cent.

The bill would require universities to report their costs annually to the government. If those costs rise by twice the rate of inflation, the institution would have to explain itself and provide a plan to restrict future increases. If costs jump again by twice the rate of inflation, then students at the institution will no longer be eligible for federal financial assistance.

Universities call the measure a form of anti-capitalist price control that would hurt the quality of education and adversely affect the poorest students. They say the government should increase spending on higher education and reject attempts to control rising tuition costs.

"Mr McKeon's bill would have the unintended consequence of closing the door to a college degree on the very segments of the college-going population that his bill purports to help: low and middle-income students," said David Warren, president of the National Association of Independent Colleges and Universities.

Mr Warren urged that consumers be allowed to "vote with their feet in a free marketplace unfettered by Washington bureaucrats".

Democrats prefer to put the onus on the states, where budget cuts forced by the recession have resulted in cuts in allocations to public universities.

Under their plan, students who live in states that reduce higher education spending by more than 10 per cent in one year would be ineligible for financial aid and tax breaks that the Democrats have separately proposed.

But the plan is unlikely to progress, since it would require reinstating taxes cut by President George W. Bush. Even top US universities are suffering from the continued poor performance of their investments.

Yale University faces a $30 million deficit in 2004-05 and has warned of up to 780 job losses to balance its books, affecting up to 10 per cent of its 7,800 non-academic employees. Up to 250 jobs among 10,800 employees at the Massachusetts Institute of Technology are also at risk.

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