Submitted by Paul Fain on January 25, 2013 - 3:00am
ITT Technical Institute is the latest for-profit higher education provider to go big with scholarships. The institute's holding company announced in an earnings call on Thursday that it hopes to expand a pilot program to all of its campuses by the end of the year. Company officials said early returns showed that discounting tuition has had a positive impact on student enrollment. The scholarship reduces net tuition to $28,000 from $44,000, according to a written statement from Trace Urdan, an analyst with Wells Fargo Securities.
The Honorable Barack Obama
1600 Pennsylvania Avenue
Washington, D.C. 20500
Dear Mr President:
I hereby enter these words into the public debate for your second term. Whatever you say later today in your own Second Inaugural, you have my word that I will be loud and relentless with these words during your second term: Abolition. Emancipation.
Why? By my count, our country has more Americans enslaved in your presidency than the 4 million slaves counted in the 1860 U.S. Census. I am looking at the 9.4 million students on Pell Grants, with little hope of an education even close in quality to yours at Columbia and Harvard or mine at Williams and Yale.
My outrageous analogy follows the federal math no one has any plans to change. This nation first counted slaves as three-fifths of a person. That’s 60 percent. The maximum Pell Grant for these students is $5,500, while the federal subsidies to all undergraduates at your Columbia and my Williams are often five times that – two-fifths. In federal tax benefits alone, Mr. President, every undergraduate at Columbia and Williams receives benefits ranging from $15,000 to $35,000 depending on your assumptions. For here I’ll pick $25,000 and call it two-fifths.
As the start of my “relentless” campaign I repeat: No one has any plans to change this situation in the most basic need for a just society: education. No one has any plans, even though everyone in the chambers and offices behind you this morning knows the outcome for these people and for the nation of this plan.
As the arc of the moral universe bends toward justice, the chains are gone. Enslavement remains, as death by poverty. You and I both know that these students, working 30 hours a week and more in unsteady jobs and raising families, have little hope of graduating.
What’s my evidence for the outcome? I don’t know what you were doing last Monday. I spent from 10 a.m. to 1 p.m. setting up and volunteering at a food bank at Bunker Hill Community College, a place filled with these Pell Grant students. Mr. President, these students have little to eat. These students are on food stamps. Our Massachusetts governor, who knows better, was on the campus for a MOOC press conference with Harvard and MIT on the day of our December food bank. He wouldn’t visit the food bank. You and I both know, Mr. President, that failing to look at hunger will not eliminate the hunger.
Amid the Oscar din for "Lincoln," let’s admit that the 13th Amendment has failed. I refer to the Constitutional prohibition of “involuntary servitude” and the legal provisions today that exempt student loans from bankruptcy laws.
Preposterous? Not at all in the 21st century. Why is the wealthiest county on Earth allowing powerful corporations to scam teenagers and others who, remember, don’t have a college education yet, into such financial shackles?
Let’s look at Section 1. “Nether slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.
You’re a lawyer, Mr. President. Declare the student-loan bankruptcy trap unconstitutional. Of course informed citizens have a responsibility to repay loans. The bankers who made these loans and the college CFOs who cashed the checks are the one to answer for these bad debts, not the entrapped students. President Lincoln didn’t know if the Emancipation Proclamation would stick. You may just win on this one.
Are my arguments here preposterous? Outrageous? How I wish they were, Mr. President. How I wish they were. I think you realize, Mr. President, that things for millions in the U.S. today are this bad for millions. I’m a sometime teacher, sir, and one of the nation’s leading obscure columnists. I can only proclaim, not issue proclamations.
With words – abolition, emancipation, enslavement – I sometimes can make people stop and think. That the 9.4 million students on Pell Grants, most of whom may have little to eat today, live in a building rather than a shanty in Nairobi’s Kibera makes no one a hero.
Are my arguments preposterous? May I send you a copy of The New Jim Crow, Mass Incarceration in the Age of Colorblindness by Michelle Alexander? We, the people, are failing on the 13th Amendment. This book is about the massive prison population in the U.S. That’s a group intertwined with poor college students at food banks. As Alexander writes, “We have not ended racial caste in America; we have merely redesigned it.”
Mr. President, the Department of Justice is considering how private colleges can meet together to discuss, without violating antitrust laws, what the colleges believe are constraints in awarding need-based aid. Listen to Alexander: “What has changed since the collapse of Jim Crow has less to do with the basic structure of our society than with the language we use to justify it.” Mr. President, would you wake up Attorney General Holder?
“Need-based aid” is just the new Jim Crow language trick. “Need-based aid” means giving money to blacks, other minorities, and the poor in general. Absence of financial aid is among the final barriers to college. Have you seen The Central Park Five? About the fate of the five young men falsely convicted of rape in New York?
I have an idea for you: Lead the next March on Washington. Why can’t the President lead the march? Tactics so far have done little to move Congress.
As you look down the Mall today toward the Lincoln Memorial, imagine crowds even bigger than at your first inauguration -- students in a march on Washington led by you. Pick a day for the march when Congress is in session. In your inspiring way, ask the students to turn around, toward the Capitol. Ask them to march on Congress to demand that every student be entitled receive the same federal aid for college. If the Pell Grant has to stay at $5,500, so be it. No more federal subsidies via tax deductions for skyboxes, indoor golf nets or new buildings. (Click here for why.)
Have the marchers demand from Congress that federal law includes student loans in federal bankruptcy protection. Add on that students on Pell Grants receive federal free and reduced lunch, too, for the duration of your second term?
Abolition. Emancipation. Mr. President, that’s the job of your second term.
Wick Sloane writes the Devil's Workshop column for Inside Higher Ed. Follow him on Twitter: @WickSloane.
Union College in Kentucky typically loses half its freshman class before the second year begins, so its new president has made students a promise: If they stay, work hard, and get involved, they won't see a bill for their last semester before graduation.
In a major victory for California public higher education, voters in November approved a plan by Governor Jerry Brown, a Democrat, to raise some taxes for seven years. Brown and others campaigned for the tax increase by saying that it would allow the public universities to avoid tuition increases. Republicans have now responded by proposing legislation that would freeze tuition for seven years, the duration of the tax increases, The Los Angeles Times reported. While unlikely to pass, the proposal is seen as a way to shape the debate over spending priorities in the state, the newspaper said.
In a white paper released today, the Institute for Higher Education Policy calls for several changes to the financial aid system, part of the Bill and Melinda Gates Foundation's Reimagining Aid Design and Delivery project, which gave grants to organizations to recommend what changes they would make to federal financial aid. The institute calls for making the Pell Grant an entitlement and keeping it at the center of need-based student aid programs, but making larger changes to other student aid programs. Among its suggestions: reforming the Supplemental Educational Opportunity Grant to provide "emergency" financial aid to students; rewarding completion, including a form of loan forgiveness for Pell Grant recipients who complete college on time; tying campus-based aid to student debt repayment levels; matching college savings for low-income households and encouraging employers to match employees' student loan repayments for the first five years after graduation.
Several more papers in the Gates effort are expected from other organizations and advocacy groups in the coming weeks.
Many of the details on a possible deal between the White House and Congress to avert the looming "fiscal cliff" are still unclear -- including, most crucially for higher education, what (if any) spending cuts would be included. But a possible agreement on taxes, reportedly reached today between Vice President Joe Biden and the Senate Republican leader, Mitch McConnell, would extend the American Opportunity Tax Credit for college tuition for five years.
The tax credit, originally included in the 2009 stimulus bill, provides up to $2,500, of which $1,000 is refundable. It was scheduled to expire this week without Congressional action.
If a deal is not reached to avert the tax increases, many domestic discretionary programs — including some important to higher education — will see an 8.2 percent cut in 2013. In a statement Monday afternoon, President Obama said the future of the spending cuts remains unresolved, but said he would insist on a balanced approach to avert the across-the-board cuts.
Yo! Congress! How about $10 billion to help balance the 2014 budget, be home for Christmas, and sled off the fiscal cliff another day? All you have to do is your job.
Stop ignoring this $10 billion raid on the U.S. Treasury by colleges and universities. What raid? The annual abuse of nonprofit status whereby colleges and universities use tax-exempt dollars to gorge on luxurious buildings, presidential salaries of $500,000 and more, indoor golf nets, skyboxes at stadiums, and on and on and on. With this $10 billion, be my guest on reducing the deficit or, better, fund 1.8 million new Pell Grants, the federal aid for the nation’s poorest students.
Any of you blinking? I invite you, then, to explain to my 7 a.m. community college students why a skybox or indoor golf nets are a higher national priority than aid for students working 30 and 40 hours a week. I’ll let you explain this to the older woman who works overnight before coming to class at 7 a.m. She wrote a stunning essay about being punched, beaten and shouted at while riding a bus to a newly integrated school in North Carolina.
Just follow these simple steps --
Eliminate all tax deductions for donations to all colleges and universities next year, from January 1, 2013 through December 31, 2013. Renew the ban for another year, and another, until colleges present their own plan to end abuse of their nonprofit status.
How would that produce $10 billion in new tax revenues? Here's my math. In 2011, colleges and universities raised $30.3 billion, according to the Council for Aid to Education. This means that people deducted $30.3 billion from their income before the Internal Revenue Service applied a tax rate to what these people paid. Lower personal income means lower taxes paid. I’ll pick a 30 percent tax rate. Due to the deductions for these donations, then, the federal government received $10 billion less than it would have.
Next, come Senators, Congressmen, please heed this call and read Article I, Section 8, of the U.S. Constitution: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States.” That’s right – The Constitution gives you, not college trustees and presidents, the responsibility to determine federal spending, be that one dollar, $10 billion, or $10 trillion.
Any new plan for higher education federal tax benefits , must require from the college an Educational Impact Statement (EIS) prior to construction of any new buildings or initiatives financed with tax-free dollars. The EIS must explain and demonstrate measurable educational benefits for undergraduates brought by the new project. College and universities will report results versus plan each year in the annual IRS 990 report. Deductions for athletic buildings and facilities will end. (James E. Coleman Jr., a Duke University law professor, first suggested the EIS to me.)
A few heard but none listened in 2006 when I felled a tree in the woods with a paper entitled "U.S. Tax Policy, Research Grants and Higher Education: The Undebated Billions," with Jonathan Leirer, a research assistant.
My opener was: “Columbia University has announced a $1 billion -- or 246,913 Pell Grant -- raid on the U.S. Treasury. Cornell University has also joined the game, taking away another $1 billion in possible taxes. These raids have the blessings of the Secretary of the Treasury, of both Houses of Congress, and of you and me.” Some numbers have changed, but the principles and formulas remain. Click here for a link to the paper. Senator Grassley, this is the paper I gave to you.
David Warren, president of the National Association of Independent Colleges and Universities (NAICU), I stipulate here that you are the best lobbyist in Washington, period. Keep your powder dry and lead your flock. Yes, I read past the first paragraph of the CAE report. I know that 25 percent of the colleges amount for 86.3 percent of the fund-raising. Your member colleges who might go out of business without charitable deductions need to stand up to the abusers. For the record, remember that it was 10 years ago now that I first pitched you the idea of having donations to fund need-based scholarships be 115 percent tax deductible. And to let donors of endowed scholarships write off the gift as fast as their incomes permit. No reply on my reminders to you. In any rebuttals to my proposal to eliminate tax deductions, please delineate why indoor golf nets and such should receive federal subsidies.
Eliminating charitable deductions, an idea in this budget debate, is a crazy idea. Reframe the discussion to eliminate the indiscriminate abuse of these deductions at so many colleges. The idea of a tax deduction to a nonprofit is that the nonprofit is providing a service the government would otherwise have to provide. Charity would be feeding, clothing, housing, educating the poor. I await anyone’s explanation of why charity is buying the Aeron chairs I saw in a Brown University library.
Why not instead focus the deductions on activities that align with national goals? Senator Reid and Speaker Boehner: The U.S. uses tax policy to support national goals all the time, from oil drilling to home ownership to hedge-fund enhancement. How about using tax policy for donations to college to close the science and math gap with the rest of the world? You may not choose to do this. Such a policy would work. Senator Grassley? Who got you to chicken out from your investigations of what colleges were doing with all this wealth? Heck, I went up and told you all this after a 2007 Finance Committee hearing.
Here’s how bad this college/tax policy situation is. Remember that the maximum Pell Grant, aid for the poorest students, the ones with 40-hour-a-week jobs, is $5,500. The federal subsidy via today’s tax policies alone at the nation’s wealthiest colleges – Yale, Princeton, Harvard, Stanford, Williams, Grinnell – is $10,000 to $30,000 per student, depending on your assumptions. (See box at right.) That’s every undergraduate, not just the ones on financial aid. Repeat: every undergraduate student at Yale, Princeton, Harvard, Williams, Stanford, receives twice the federal subsidy as the nation’s poorest students. Remember, the hedge-funder’s child at Grinnell received this $10,000 just for enrolling. No needs test. The poor students and their families must hand over all their personal financial information in the FAFSA form.
The plain truth, of course, is the monkey wrench explaining the horrors of colleges and abuse of tax policies. Even I wonder if I am making this up. Is this the nation any of us want to live in? Twice the federal subsidy for wealthy students at Williams as for a 50-year-old woman working overnight and showing up at a 7 a.m. class in a community college? As usual, I pray for ideas better than mine. Remember, the point of tax deductions for charity is to create a public good for the nation. Remember, the colleges leading this $10 billion treasury raid are the same as those who have enrolled only 174* undergraduate veterans. The * is because some don’t even know the number of veterans enrolled.
I’ll close with an invitation to all who have read this far disagreeing. What would your argument be against this discussion-sparking idea:
Why not link deductibility on gifts to college presidential pay (including annuities and housing, of course)? Gifts would be 100 percent deductible to a college where the president earns $250,000 or less; 50 percent deductible at colleges with presidential pay between $250,000 and $500,000; and no deductions for college with presidential pay higher than $500,000?
Your answer must convince a community college student in a 7 a.m. class.
Wick Sloane writes the Devil's Workshop column for Inside Higher Ed. Follow him on Twitter: @WickSloane.