On the other hand, less than 1 percent of the students enrolled in private schools will benefit from a free tuition policy as instituted by a tax credit. In the year in which the data is based 459 public and 96 private institutions charged between $501 and $1,000 in tuition and required fees. The public schools enrolled 3,695,283 students and the independents enrolled 81,941 students in that tuition range. The effect of the credit is, when combined with those institutions charging less than $500 in tuition, that 1,406 public schools and 118 private schools will have either free tuition or will have their tuition charges halved. Those schools enroll, for the publics, 8,682,744 students and for the independents, 97,616 students. Finally, these figures mean that approximately 97 percent of the public college and university students will, by instituting a tax credit, have all or one-half of their tuitions. paid for by the U.S. Government as compared to only 4 percent of those students enrolled in independent institutions of higher learning. We cannot understand how some people believe private higher education will be assisted through a tax credit system, when it is absolutely clear that public college students will pay no tuition or have their current tuition cut by one-half. The effect of the credit on private higher education would be simply a disaster. How could our institutions compete with schools whose cost is free? As responsible students, we cannot allow the institutions that educate us so well to be ruined in the future by a misguided Federal tax policy. The coalition disputes claim institutions will not capture these funds. We keep hearing from our administrators and they make valiant efforts to keep our tuition down but I think it is just some of revenue sharing and I think from administrators, especially with refund provision, they say everybody will get some benefit, can raise tuition fairly painlessly that makes raising tuition fairly easy. What would we consider as an amendment that would be acceptable as the problems we have are income distribution tuition levels? Simply stated, we recommend the credit be tied to family income in the amount of tuition paid for each child. We believe the program should be progressive. In other words, the higher a family's income is the less the credit would be and the higher the tuition paid by the family the greater the credit received would be. It is our contention that the greater a family's income, the greater is their reponsibility to pay for their children's education. Those who can afford to pay for education should. Also by tying the credit to tuition actually paid, we solve the imbalance of benefits between those attending public versus independent institutions of higher education. We will be sending to you within a week or more complex proposals. We do not think necessarily under our proposal, given the problems you see in terms of people making $30,000 or $40,000 there is a credit and it should be progressive. We do not see $500 adding much. There was recommended $1,000 credit and if it is a progressive tax, that is the conclusion of my statement there. But I want to mention two things. The first is that I have to commend President Carter for his State of the Union address yesterday, where he came out in favor of the Department of Education. Our organization got on the bandwagon fairly early on this and I think if we had a Department of Education then the state of American financing of higher education would not be where it is today. So we are looking forward to the new Department and Secretary of Education plan. I am sorry Mr. Mahon is not here because I wanted to thank him for his efforts on behalf of independent colleges and universities and I do not remember you gentlemen's voting records. But if you voted for the Chaffee amendment and the social security bill, we appreciate that in our organization. Thank you. Senator PACKWOOD. Thank you. Whoever is next, take the microphone so the people in the back can hear you. STATEMENT OF GAINES CLEVELAND, COLLEGE REPUBLICAN NATIONAL COMMITTEE Mr. CLEVELAND. The College Republican National Committee, the Nation's largest student political organization, wholeheartedly supports the concept of tuition tax credits. None of the many pieces of introduced legislation, however, has all the specific features we would like to see included. Initially any tax credits bill must have an earnings limitation. Since the basic thrust of this legislation is to ease the financial plight of the middle class, those who do not need this support should not receive it. Congressman Coughlin's proposal which calls for a gradually diminishing credit as income increases above $22,500, is an intelligent way to reduce the program's cost without enforcing an arbitrary line above that which no credit is provided. Of course, the more students a family has covered under this legislation, the higher the point is drawn at which credits begin to diminish. Second, any tax credits bill must include refundability. This means a student entitled to a $500 credit for higher education expenses, but who only pays say $200 in taxes because his income is so low, would receive a $300 refund from the Federal Government. For lower income students and their families, this refund allows them to finance more of their own education. Using refundability would also mean a corresponding reduction in basic equal opportunity grants. This is a positive step toward reducing Government control over American education. Third, any tax credits bill must require that the student support part of his own education. A bill which will cover all of the student's expenses up to a specified amount could potentially pay for all his educational costs. The Packwood-Moynihan bill, which covers only 50 percent of tuition up to $500, insures that the Government encourages a degree of self-reliance instead of dependency. Fourth, any tax credits bill must not overly favor inexpensive State supported colleges and universities at the expense of private schools. The Packwood-Moynihan bill adequately fulfills this goal. Bills which cover 100 percent of tuition or costs up to a certain amount encourage students to go to inexpensive schools where the credit will cover a greater percentage of their costs. By covering only 50 percent up to $500, the Packwood-Moynihan bill requires that students pay for at least half of their education. This bill takes a step toward protecting our system of private higher education. In light of these four points, the Packwood-Moynihan bill comes the closest to our conception of what tax credits should accomplish. We give it our foremost support. Speculating for a moment, extending the concept of refundability permits the Federal Government to implement a much more rational system for funding education. For lower- and middle-income students and families, tax credits could completely supplant the basic equal opportunity grants. Through refundability and the income tax system, students could receive the same amount of financial aid as they now receive in grants. Tax credits have two fundamental advantages. First, tax credits can be distributed through a much simpler system than grants. Once the specific socioeconomic determinants have been chosen statistical charts can be provided to each college and university in the Nation. It is a simple matter of cross-referencing to determine how much a particular student deserves. He can then be issued a certificate for that amount which must be attached to his IRS form. Savings result all the way around. Government bureaucracy and its control over education are both reduced. Students escape those complex HEW forms. And colleges and universities cut back on the amount of paperwork they must churn out to apply for grants for their students. With reduced costs more money can directly go to benefit the student rather than lose itself in the bureaucratic shuffle. Second, grants appropriate citizens' money and then return it with strings attached. Tax credits cut those strings. Students, not Government, decide how their money will be spent. Students can develop self-reliance because they control their own finances instead of depending upon a Government handout. Greater efficiency and greater freedom: Those are two reasons to support tuition tax credits over Federal grants. Supplementing this base would be the present national direct student loan and Federal guaranteed student loan programs. Our major criticism of these programs is the massive number of bankruptcy claims which allow students to slip away from paying their debts. We encourage the Government to enforce a stricter collection procedure. In addition, bankruptcy laws should be tightened up-making it more difficult for students paying back Government loans to duck repayment. Senator PACKWOOD. Let me stop you if I can here, because your time has run out. Mr. CLEVELAND, OK. Senator PACKWOOD. I can put the whole statement in the record; only a few paragraphs to go. Mr. CLEVELAND. I just have two paragraphs. Senator PACKWood. We will put them all in the record. Mr. CLEVELAND. Thank you. Senator PACKWOOD. Just for the record, what school do you go to? Mr. ZAGLANICZNY. I went to State University of New York. Mr. ZAGLANICZNY. No. Well, I will be if I can get enough money to pay the tuition. Senator PACKWOOD. If the tuition bill passes. Senator MOYNIHAN. Where did you go? Mr. ZAGLANICZNY. Went to Empire State Sarasota Springs, and finished at Binghampton. Senator PACKWOOD. Mr. Barry. STATEMENT OF KENT L. BARRY, PRESIDENT OF THE ASSOCIATED STUDENTS OF MICHIGAN STATE UNIVERSITY, ACCOMPANIED BY COREY BINGER AND MICHAEL MCCANDLESS, MEMBERS OF THE PRESIDENT'S STAFF Mr. BARRY. Mr. Chairman, honorable committee members, I am pleased to appear before you this morning in support of the tuition tax credit bill. Accompanying me today are Mr. Corey Binger and Mr. Michael McCandless; both members of my staff. Our testimony is representative of the major universities and colleges-public and private in the state of Michigan, comprising a student population of well over 350,000. As the president of the student body at Michigan State University, I am well aware of the problems in attaining a place in the world of higher education. This awareness has been manifest throughout our student community and, as a result, has prompted the formation of a fact-finding task force whose job it has been to prepare a detailed analysis of the problems as we have seen them. The value of our testimony, however, does not lie in the statistical and graphic analyses that our research has led us through; but rather, in the expression of the effects felt by the "average" Michigan college student in his or her attempts to deal with rising tuition costs. The cost of tuition at Michigan State University, recently cited as one of the ten most expensive public institutions of higher learning, has risen by some 28 percent in the last 2 years. Even with our own limited knowledge of the variegated factors which make up the entire economic picture, it is readily apparent that the increases are not in line with the growth of the economy as a whole; and this trend is certainly not unique to Michigan State University. We believe a tuition tax credit would provide reasonable financial assistance to those families and/or individuals who would not otherwise be eligible for grants or scholarships. We have determined, through our research, that institutions throughout the country are suffering from a characteristically similar fate; to wit, they have seen a reduction in the numbers of students enrolled from economic backgrounds traditionally regarded as the middle class. We strongly support financial assistance programs for lower income families, and we do not regard the support of Congress for a tuition tax credit as being in any way indicative of a diminution of support for the needy. Rather, we feel that such legislation will serve to guarantee that no person be denied a college education on economic grounds alone. This is a crucial point, and one which we cannot stress too strongly. There have been some who would urge that we turn our efforts in the direction of direct aid from the Federal Government for students in financial need. We believe that the tax credit for tuition would more properly address the problem by allowing taxpayers to keep more of their earnings, instead of waiting in line for Federal "aid." Enrollments are down at most of the colleges and universities in the State of Michigan, and this is indicative of a national phenomenon. Part of this problem can be attributed directly to the fact that the "baby boom" years have reached their zenith. Another part of the problem can be traced directly to the rising costs of obtaining a college education. We believe that this second factor is one which should concern all Americans. A tax credit for tuition would certainly go a long way toward giving further incentives for individuals to pursue their educational aspirations, without undue regard for the limitations imposed by economic barriers. Such incentives are especially significant in instances where an individual would be unable to attend college without the credit. Typically, these persons are to be found in the middle class, where they are regarded as too affluent for Federal or State scholarship aid. One of the most far-reaching and significant aspects of the proposed legislation is that this policy would encourage a freedom of choice. Senator Moynihan has correctly reminded us that: As the "tuition gap" between public and private colleges has widened, the proportion of college students choosing private campuses has shrunk: from 50 percent in the 1950's to less than 25 percent today. The ever-expanding space between the cost of a private college and a school subsidized by the Government, has meant that the freedom of choice and opportunity has been denied to many persons as to where they will pursue their educational ambitions. As rising costs and decreasing enrollments force more and more private institutions to close their doors, the diversity of choice, and indeed freedom of choice, is similarly reduced. Again, I would agree with Senator Moynihan's assessment that: Diversity and pluralism are values too, and perhaps nowhere more valuable than in the experiences that our children have in their early years, when their beliefs and attitudes are formed, their minds awakened, and their friendships formed *** I do not believe it excessive to ask that they be embodied in our national policies for the betterment of American education. A society that wishes to remain forever free must concern itself with the proper development of its succeeding generation and allow them their own freedom of choice and will for the determination of their own future. Finally, we believe that the tuition tax credit will help promote the kind of diversity and pluralism which have marked the United States for greatness. We sincerely think that it is essential for the individual to have such choices available in decisions of educational pursuits so that he is not relegated, by economic necessity, to one alternative. Mr. Chairman and honorable members of this committee, we are convinced that a situation approaches rapidly where only the very affluent and the very poor will be able to attend college, and we are convinced that what action must be taken to ease the financial plight of the middle-income families is appropriately being taken here. In the words of the late distinguished Senator Humphrey, "A college education has become almost a necessity for children to have opportunities." As a representative of the student community in the State of Michigan, I see the tuition tax credit as an outstanding example of progressive legislation aimed at attaining a high level of |