STATEMENT OF THE COALITION OF INDEPENDENT COLLEGE AND UNIVERSITY STUDENTS

SUMMARY

The Coalition of Independent College and University Students (COPUS) stated the organization's continued opposition to tuition tax credits, unless current legislation is modified to meet the Coalition's objections. Their testimony focuses on the harm that credits would do to independent institutions of higher education, the likely increases in tuition because of the credit and the fact that the credit is merely a subtle means of institutional aid.

The Coalition would reconsider their opposition to tuition tax credits if the measure was based on the level of family income and the amount of tuition a student pays. Finally, COPUS recommends that a reformed and more fully funded program of Federal student assistance will more adequately target funds to those in the low and middle-income groups and will deliver more money to pay the costs of tuition than a tax credit would. To that end the Coalition calls for an increase of at least one billion dollars in student aid for the next fiscal year.

Mr. Chairman and Members of the Committee, we thank you for the opportunity to testify on the utilization of the tax system for relief of the high cost of tuition and related college expenses.

I am Lawrence S. Zaglaniczny, National Director of the Coalition of Independent College and University Students, also known as COPUS. The Coalition is a nationwide organization representing students who attend independent colleges and universities. Our primary concern is working for an adequate and balanced system of Federal student financial assistance so that students may attend the higher educational institution that best suits their needs, talents and aspirations. We seek Federal student assistance programs that will allow needy and middle-income students to select a college based on their ability to achieve and not based on their ability to pay. Consequently, we welcome these hearings and an opportunity to comment on the various proposals under consideration to institute a system of tax relief for parents and students.

The issue of tuition tax credits has created a national debate on the financing of higher education. And, it is timely that the Executive, the Congress and the American people consider the state of educational finance, since higher education has been neglected in the past few years after the campus disruptions of the late Sixties and early Seventies subsided. Frankly, inflation, the high cost of energy, mandated social programs and years of underfunded Federal student assistance programs have made it mode difficult to pay for a college education because these factors have driven tuition costs higher and higher. Especially for the Coalition's constituency, higher tuition bills and related expenses have forced some students to drop out or transfer from their private school. And, many prospective students do not even consider going to a college in the independent sector because of their high costs. It is for these reasons that we commend the sponsors of this type of legislation in their recognition of the financing problems of higher education and for beginning a national dialogue seeking answers.

Our testimony is in two parts. First, we again state our opposition to the utilization of the tax system as a means of financing individual's costs of attending college. However, we do support reform of the current system of student aid and increased funding of the programs so that more students are eligible for assistance; and we call for an increase of at least one billion dollars in the current programs so that they better serve needy and middle-income students. Such a targeted increase in appropriations will better meet the goals of the proponents of tuition tax credits, at a substantially reduced cost and with less constitu tional controversy. Second, while the Coalition opposes tuition tax credits, we do realize there is great support for the concept in the Congress. Therefore, we will suggest changes in the already introduced tax credit proposals, which if adopted, would allow the organization to reconsider the tax credit idea and, perhaps, come to support it.

Since I have very little time to testify, I recommend the Committee examine our testimony before the House Budget Committee on May 12, 1977-with copies of which we will be happy to provide you. In that statement, we pointed out that tuition tax credits will upset the already tenuous balance between public and independent higher education in their friendly competition for students. For example, if a tax credit and refund policy were adopted, we believe the Federal government would be establishing a "free tuition" policy for many institutions, and if there were a "half cost" provision, then many public colleges would effec

tively have their tuition charges reduced by 50 percent-to the detriment of the independent sector.

We have done some research to focus our arguments. Table I at the end of this statement indicates the undergraduate tuition and fees charged in academic year 1976–77. These figures are broken down in $500 tuition and fee ranges, by the number and control of institutions in each dollar range, and by the number of students enrolled broken down in the same fashion.

It is claimed by some advocates of tuition tax credits, and in the press, that a system of tuition tax credits will aid private higher education. This is not true and, in fact, private higher education and their students will not receive benefits proportionately equal to those received by students attending public schools.

In our survey of the nation's colleges and universities we found that there were 1,450 publie schools and 1,391 independent colleges for a total sample of 2,841. The publics enrolled 8,883,353 students and the independents enrolled 2,281,933 students. In the year for which the data is given 947 public and 22 private institutions charged $500 or less in tuition and required fees. The public schools enrolled 4,987,461 students and the independents enrolled 15,675 students. A tuition tax credit and refund would mean that the government will give a "free tuition" education to 56 percent of all students enrolled in public higher education institutions. On the other hand, less than one 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 four (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 onehalf. 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 opposes tuition tax credits because they will increase tuition costs. In fact, as students we are aware that institutions make strenuous efforts to keep tuition rises down. Tuitions, however, continue their alarmingly rapid rise. Considering all the factors that cause increases we are most concerned that a credit will be just another form of institutional aid. Trustees and State Legislatures are under great pressure to provide education at a reasonable cost in order to provide students with an education. Yet, many institutions try to save money for education by cutting corners on maintenance, paying low salaries to employees and through other means that normally they might not use.

A tax credit going to every student will result in increased tuitions because institutions know that their students will not be affected in a relative sense. Consequently, colleges can raise tuitions knowing the credit will not substantially affect their students in a relative economic sense, thereby, allowing the school to capture the monies. The same is true for State Legislatures in the public sector. The credit would be a subtle form of revenue sharing.

It is for these two primary reasons among our other objections that our organization of students who attend independent institutions of higher education oppose the idea of tuition tax credits.

We do suggest that current bills can be amended to meet, at least, our problem with the benefits flowing to the public sector in an unfair fashion. If such a credit were introduced, with our recommended changes, then the Coalition would reassess its position of opposition. While we have not yet worked out all the details regarding income levels, tuition levels and the credit benefits, we recommend any credit be geared to income and tuition levels.

Simply stated we recommend the credit be tied to family income and 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 responsibility 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 vs. independent institutions of higher education.

Naturally, we will consider other reasonable amendments to the credits bill such as a floor, an across-the-board percentage credit or tax deferments.

The most effective public policy solution to the whole question of financing an individual's postsecondary education, especially for the low and middleincome student is through a reformed and fully funded system of Federal student assistance. This is the path we prefer, rather than tax credits.

TABLE 1.-NUMBER OF INSTITUTIONS AND ENROLLMENTS

[Undergraduate tuition and required fees broken down in $500 increments, and broken down by numbers and control of institutions and respective enrollments]

PROPOSAL OF THE COALITION OF INDEPENDENT COLLEGE AND UNIVERSITY STUDENTS FOR AN EQUITABLE TUITION TAX CREDIT RESPONSIVE TO INCOME

We do suggest that current bills can at least be amended to more appropriately distribute benefits between the public and private sector students. If such a credit were introduced with necessary changes, then the Coalition would reassess its position of opposition.

Our tuition tax credit proposal gears the benefit to income and tuition levels. Simply stated we recommend the credit be tied to family income and the amount of tuition paid for each child. We believe that the credit should be progressive after a certain point of income.

We propose a refundable tuition tax credit that would give every student or their family a benefit as follows: For those with incomes between $0 and $25,000 per year the credit would amount to 25 percent of paid tuition and required fees; for those with incomes between $26,000 and $45,000 per year the credit received would be reduced by one percent per every $1,000 of additional income of paid tuition and required fees. For those with incomes of $45,000 or more the credit received would be 5 percent of paid tuition and required fees.

The interesting and favorable aspect of this proposal is that no matter what type of college one goes to, public or provate, one receives an equal percentage of one's tuition costs depending on one's income. For example, let us take one family whose income is $14,000. Thus, according to the formula, that family would be eligible for a credit amounting to 25 percent of tuition paid. If their dependent went to a college that charges tuition at a level of $500 per year, then that family or student would receive a tuition tax credit of $1,000 which is 25 percent of tuition paid.

As another example, let us take a family that made $40,000 per year. Thus, according to our formula that family would be eligible for a credit amounting to 10 percent of tuition paid. If their dependent went to a college that charges tuition at a level of $500 per year, then that family would receive a tuition tax credit of $50 which is 10 percent of tuition paid. Or, if their dependent went to

a college that charges tuition at a level of $4,000 per year, then that family or student would receive a tuition tax credit of $400 which is 10 percent of tuition paid. As one can observe the credit received is equal according to a percentage of tuition paid that is determined by a family's income.

In sum, it is this type of tuition tax credit that the Coalition might accept, however, we cannot accept any of the current bills on this subject that are before the Congress. Naturally, we are interested in other reasonable amendments to this legislation such as a floor, an across-the-board credit or tax deferments as embodied in the Mikva bill.

TABLE V.-Coalition of Independent College and University Students (COPUS) proposal for an equitable tuition tax credits responsive to income

[Tax credit received as a percentage of tuition paid]

STATEMENT OF KENT L. BARRY, PRESIDENT OF THE ASSOCIATED STUDENTS OF MICHIGAN STATE UNIVERSITY

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 over 350,000.

As 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 see 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 two 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 a 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 cost 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 everexpanding 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.

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 action must be taken to ease the financial plight of the middle-income families.

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 excellence in education for many who would not otherwise be participants. The opportunities spoken of by Senator Humphrey can, in fact be realized; but not without your help. I respectfully urge your support for the Tuition Tax Credit Act.

Thank you for your time and patience.

STATEMENT OF JOHN BRADY, CHAIRMAN, COLLEGE REPUBLICAN NATIONAL COMMITTEE; PREPARED BY STEPHEN FACKLER, RESEARCH DIRECTOR FOR THE COLLEGE REPUBLICAN NATIONAL COMMITTEE

Income tax credits for college tuition is the Republican solution for lessening the impact of spiraling education costs for all Americans. In providing direct tax relief, preventing expensive administrative costs, and allowing college students and their parents to finance their own education, it presents an intelligent modification of the current system of relying on a mix of government grants and loans. The average young American is finding it increasingly difficult to afford the costs of a college education. And since college is not necessarily the instant key to employment and security it once was, more and more Americans see it as an unnecessary luxury and go without it.

The basic premise of the present system is that grants will serve primarily low-income students, loans will aid middle income students, and the high income families in our society don't need any assistance.