for it now, and we wish you success. I would like to make six brief points for my association.

First, we believe that the living expenses as well as tuition, books, and fees should be included in the educational expenses to which the credit applies. It is interesting. We have been talking about the expenses in private education. I think it is a fallacy to think that public education is inexpensive. The public education tuitions have gone up, and the living expenses, the eating and the room and all other contingent expenses, are just as high in the public sector as they are in the private sector.

Therefore, the cost of the middle-income family continues to rise.

We also believe that the tax credit plan should not be a graduated benefit based on tuition alone, as in S. 2142, which pays half of tuition up to the maximum of $500. This might not be received well by those States who have really put money into higher education in an attempt to keep the tuitions down.

I do think, however, that if living expenses were included as well as tuition and fees, that would take care of the problems of a graduated

tax.

We would also like you to consider, if you would, including graduate and professional students. Earlier, there was some testimony about the person who is struggling to improve himself or herself, and many people who are employed and who are college graduates are taking graduate programs in order to improve themselves, and hopefully make a greater contribution in society and pay more taxes.

So, this group of people, many of whom are supporting themselves, or many of whom want to support themselves, might be discriminated against if they are not included in this bill, and for the same reason we would like for you to consider including part-time, at least those who are enrolled one-half to three-quarters time.

We find this phenomenon developing in education. Increasing numbers of people have family obligations, economic obligations that require them to take part-time work rather than full-time, and I hope you will consider that point.

The fifth point, it would probably be better not to deduct Federal, State, and nongovernmental student aid or the GI bill from the proposed tax credit, as in S. 311. This opens up a bureaucratic maze, I think. It is just too difficult, and when you put these packages together of all the aids, you still may have a student falling short of what his real need is.

The institution may not be able to provide that. Even if he is middle income, let's say his parents could pick up the difference, but as so many middle-income people are faced with two and three children. in colleges, I think it would be better to leave that one alone, and I do not think the Government will be shortchanged that much.

Finally, and this is really not as much a solution as a request for you to think about, and I know we should think about it. As far as possible colleges, boards, and States in both private and public sectors should be discouraged from raising tuition or other charges to capture the tax credit. How you do that, I don't know. Tuitions are going up, but I still think in the long run the kinds of aid that can allow the institutions to keep their tuitions at reasonable levels is the best kind of aid.

Thank you.

Senator PACKWOOD. We have had testimony from any number of educators who indicated they did not think per se the tuition tax credit would result in increased tuition because they will do everything possible before they raise tuition. That is the last thing they will do. They will do everything to keep tuition down. Is that a fair statement? Mr. LUBBERS. I think it is a fair statement for a large majority of institutions of higher education. Something is happening in institutions of higher education, not necessarily in the better known institutions in the Nation, but those institutions which serve the largest number of students are faced with enrollment declines, so you have an interesting competitive situation developing.

So, that is why this idea is a good idea now, because institutions have pressures on them not to raise tuition, because they want to be more competitive in the marketplace, too. That is a factor, and I think that will mean that most institutions will not try to capture this money just because they see it available.

Senator PACKWOOD. Senator Roth?

Senator RoоTн. I will defer for the moment to the Senator from New York.

Senator MOYNIHAN. I would just like to confirm the point that you were raising. We do face the prospect of declining enrollments in higher education. It is demographically there, and it may be it is there in consequence of the kinds of pressure. Dr. Eggers spoke of on this middle stratum of citizenry who will normally do all in their power to get their children into college. But there is a question of opportunity costs, and the opportunity costs of higher education, particularly in the private institutions, are getting to be considerable.

Opportunity cost is an economists' term, as I am sure the chairman knows. You capitalize the foregone income and the expended income, and you find that you may have dropped $100,000 or whatever in the course of 4 years of education, and the question is, will your extra income subsequently surpass the equivalent of that money capitalized and paid back with interest, and you had better be a doctor, you know. But we would like to point out again on this question of graduate and professional schools, we have differences in our bills.

The chairman's and my bill would automatically extend benefits to any level of education and part-time students because it is a simple problem if you are paying tuition, to claim a credit. That is it.

It seems to me it is also useful to note that this is a concern of public institutions as well. I mean, none of them are so well endowed as not to be costly to the students.

Mr. LUBBERS. Senator, I would like to see a survey of students who drop out of institutions because of financial need, and again, I am very much for the private sector, and a graduate of private institutions, as I think they should make their case. We can agree with them on much of it, but I would wager that people are dropping out of State institutions for cost factors, too, and I do not think it should be overlooked in your considerations.

Senator MOYNIHAN. It is a fair point. If we could get anyone from the Department of Health, Education, and Welfare to come here, we could ask them, but every other subject we ask them about, they have no answers for.

Mr. LUBBERS. Well, we have not had quite the same horror stories that I have heard this morning, but we have had our share, too. We were talking about the desire of the private sector to remain free. Well, for the hundreds of thousands or millions of us who are in public education, we also like our freedom, and we do not care to have Washington bureaucracy dictate to us and control our education any more than the people in the private sector do.

Senator MOYNIHAN. A very fine point. The diversity of the system is only crudely described as public-private. The systems of all 50 States are both public and private, but mostly public. This is true even in irascible jurisdictions such as my own city of New York, which insists upon having its own university, and indeed having the first public tuition-free college in the world, not just in this country, but in the world.

In the City College, which I first entered, there is a diversity that does not want to be dominated by that awful "thing" over there, and we are with you, sir, and we thank you for coming.

Mr. LUBBERS. I was very interested when yesterday, I boarded the plane in Grand Rapids, I picked up a copy of the Detroit Free Press, and I see on the front page, four Senators urge tax credits for tuition. So, even out in the States they decided to put it on the front page, at least of our leading Detroit newspapers. I should say one of our leading Detroit newspapers.

[General laughter.]

Mr. LUBBERS. You are making the news even in our country.

Senator MOYNIHAN. Mr. Chairman, I wonder if I could extend my remarks for 1 minute to show you a different perspective. Out in Detroit they tell you the news is that the Senators want to give some deductions to the citizenry. The Washington Post story has an entirely different approach. It says, "tax officials are critical of tuition credit." We are going to give up some of their money, and increasingly their money consists of all that you earn save that which they have agreed to give up.

Senator PACKWOOD. Which we used to call feudalism. [General laughter.]

Senator PACKWOOD. Senator Roth?

Senator ROTH. I might suggest to the Senator from New York that maybe we could finance these college tax and other credits by getting rid of some of the bureaucracy. I do not think it would be very popular, but it is discouraging that we can get no answers from the very agency that is supposed to have the prime responsibility for education policy.

I would like to say with respect to your testimony that I, too, agree it would be desirable to extend those benefits or credits to graduate education. As one who has been leading the fight for higher education, there has been a series of compromises over trying to get something done in this area at all. But it does seem to me, as you point out, that it is in our national interest to encourage people to obtain not only college degrees but professional degrees, and I have a lot of sympathy with what you are saying.

I have just one quick question. You have heard the testimony of the HEW as they view college tax credits for the middle class, and I wonder if you would like to make any comments on that.

Mr. LUBBERS. HEW's opposition to the tax credit program?
Senator ROTH. Yes.

Mr. LUBBERS. I do not know where they are coming from. I have no idea that HEW would necessarily want to protect the Federal Treasury. That has not necessarily been their desire in the past. They like to get into the Federal Treasury and we in education have supported that. I am at a loss to know why they are not supporting this particularly when the higher education community itself is beginning to come together. We are not together, as the testimony indicates, but we are coming together, and I would think that HEW would take that opportunity to work with us on this issue, and be for it. I don't understand.

Senator PACKWOOD. HEW has no hesitancy to spend the Public Treasury if they control it.

Senator ROTH. It is a difference of approach.

Senator PACKWOOD. But if they do not control it, they want to keep it. The Treasury, of course, just does not want to let you keep any money. They have a different philosophy. They don't like to spend it. They like to collect it.

Mr. LUBBERS. I guess, then, it is just a matter of control, and they seem to have enough control over most of our lives. Perhaps we can find some aid that will free us from that control, and it would be to all of our advantages.

Senator ROTH. You indicated in your testimony that ASCU is working separately on proposals to make sure that colleges do not raise tuition to capture the tax credit. You say it is a difficult problem, but if you come up with any constructive, innovative ideas, I urge you to let the members of this committee hear them.

Mr. LUBBERS. One of the most constructive is the one I mentioned. The competition in our society does sometimes come about, and I think that will keep that from happening in many schools, particularly the State schools.

Senator ROTH. Is it not also true that for every $100 colleges raise their tuitions, there is a drop in the number of students who enroll, so there is that restraining pressure?

Mr. LUBBERS. Definitely. Definitely.

Senator PACKWOOD. It is a pleasure to hear you talk about competition, coming from the public sector. Of course, the bill that we had before, Senator Moynihan's and mine and Senator Roth's, applies to primary and secondary schools, public and private, and we had grave fear expressed by the public sector of primary and secondary education. If 10 percent of the people who now go to private schools would by chance go to 12 percent, it is a threat to the public school system, and we cannot for the life of us grasp how 88 percent can be threatened by the 12 percent.

Mr. LUBBERS. My only response to that is personal. I am not speaking for my association at all, but I welcome the competition. I like to have the ground rules fair, and I come from a State, the State of Michigan, which has done a great deal to assist the private institutions, and which has considerable autonomy amongst the public institutions, so we compete. Now, how to keep that competition healthy rather than unhealthy is our problem, but that is the kind of problem under which it is fun to work.

22-795 78 pt. 2-5

Senator PACKWOOD. Thank you very much. I hope you can get your plane out.

Mr. LUBBERS. Thank you very much.

[The prepared statement of Mr. Lubbers follows. Oral testimony continues on p. 452.

STATEMENT OF PRESIDENT AREND D. LUBBERS, GRAND VALLEY STATE COLLEGES, ALLENDALE, MICH., ON BEHALF OF THE AMERICAN ASSOCIATION OF STATE COLLEGES AND UNIVERSITIES (AASCU)

SUMMARY

1. AASCU believes that the most important single way to provide access to the approximately 80 percent of college students who attend public colleges and universities is to keep tuition as low as possible.

2. We are concerned that present federal student aid strategies may encourage tuition increases at both public and private colleges.

3. If Congress adopts a tax credit plan, we feel it should include the following points. Some are in either S. 311 or S. 2142.

a. Living expenses as well as tuition, books, and fees should be included in determining the credit.

b. A tax credit plan should not be graduated related to tuition. It should recognize the needs of the 80 percent of students at public colleges, while not taking anything away from the 20 percent at private colleges.

c. Graduate and professional students should be included.

d. Those enrolled one-half or three-quarters time should be included.

e. It would probably be better not to deduct federal, state, and non-governmental student aid (including discounted tuition at private colleges) from the proposed tax credit. Such a deduction would hurt many students, and adds to paperwork and bureaucracy for both students and the government.

f. As far as possible, colleges and states should be discouraged from raising tuition to take advantage of a tax credit.

g. Congress should be aware that under present federal student aid programs, "needs analysis" systems would deduct about one-half the tax credit received from student aid awards for many working-class and middle-class families. This is a serious problem which must be addressed as part of any tax credit plan.

STATEMENT

I am President Arend D. Lubbers of Grand Valley State Colleges, appearing on behalf of AASCU. This is an association of 325 public four-year colleges and universities enrolling approximately 2,250,000 students-about one-third of all four-year college and university students in the country.

We have been asked to testify on tax credit legislation and particularly on S. 311, filed by Senator William Roth of Delaware and many of his colleagues, and S. 2142, filed by Senators Daniel P. Moynihan of New York, Robert Packwood of Oregon, and many of their colleagues.

Let me sum up some of the concerns about tax credits and financing higher education which our members, and I believe spokesmen for many other higher educational institutions, have voiced during recent years:

1. We believe that the most important single way to provide access to the approximately 80 percent of college students attending public colleges and community colleges-a still larger percentage in many states-is to keep tuition as low as possible. We feel that this is extremely important for lower-income students but also for working-class and middle-class students-those whose incomes are too high to qualify for much if any student aid, but who do not have the resources to provide the $3,000 a year or more required for many public college students today.

2. We are concerned that the student aid strategies now pursued by the federal government and some state governments do nothing to help hold tuition down, and may indeed result in tuition increases. By giving money to students which can meet only a fraction of their instructional costs in either public or private colleges, the federal government does nothing to help colleges provide services at reasonable costs to all students. Indeed, as Edward Hollander, former Commissioner of Higher Education in New York, said at a seminar sponsored by the American Council on Education, the availability of federal student aid helped