Good Money After ... Mediocre?

As House passes stimulus bill, experts on college access and affordability question recent policy approaches that economic package would reinforce.
January 29, 2009

The disconnect could not have been more glaring. As the House of Representatives passed an economic stimulus package on Wednesday that would pour tens of billions of dollars into higher education, through spending on research, school and college infrastructure, and aid to states to ward off cuts in education budgets, leading policy makers gathered just a few blocks away to discuss K-12 and higher education policy in the Obama administration.

And while the conversation did not in most cases focus on the stimulus package, the gist of the discussions -- that state and federal decision makers have largely missed the mark in much of their recent policy making about higher education -- left the unmistakable impression that the economic package, while perhaps necessary from a purely economic standpoint, would not necessarily be the best use of federal education dollars.

The Educational Policy Institute's National Capital Summit, "Education and the New Administration," brought together federal and state officials, association leaders, analysts and others to talk about how the Obama team would be likely to deal with issues along the educational pipeline, from early childhood education through higher education. The meeting took place almost literally in the shadow of the Capitol building, where the House was voting largely along party lines (with 11 Democrats joining all 177 Republicans in opposing the measure) to approve an $819 billion package of spending and tax cuts designed to stimulate the moribund economy.

The economic stimulus package was not formally on the agenda for the meeting, the higher ed portions of which focused on ensuring students' access to and success in college, and making college affordable. But as the meeting's speakers talked about the state and federal policies that have (and haven't) worked thus far in attacking what James E. Applegate called the "stunningly big" problem of getting 12-15 million additional students some kind of postsecondary credential in the coming years, it was hard to escape the feeling that the massive dollars the government is preparing to pour into higher education would largely reinforce existing policies whose wisdom the experts questioned.

Applegate, a longtime higher education official in Kentucky and now a senior vice president at the Lumina Foundation for Education, bemoaned the fact that most federal and state aid to colleges was based purely on the number of students they enrolled, not on how the students fared once there. Unless and until that changes, he said, any significant new money that flows to states for higher education, or directly to colleges, is unlikely to compel institutions to focus more on ensuring that their students succeed. The stimulus package would, as currently constructed, send at least $39 billion, and as much as $15 billion more, to states to fill gaps in their budgets for public schools and public higher education, without any major strings attached for how those funds are spent.

"We need to shift our reward structure, so that states and the federal government say, We're going to put a priority on student completion, not student enrollment," he said. "I'd like to see states saying, 'We're not going to fund you on [full-time enrollments] any more,' so that discretionary money is driven a great deal by success instead of enrollment. If we could get that pulled off in 50 states, that'd be a good first step."

Arthur Hauptman, a financial aid consultant, questioned the wisdom of pouring significantly more money into the Pell Grant Program, as the stimulus package would do. Among other things, as he has argued previously, increasing the maximum Pell Grant makes many new students with family incomes above $40,000 eligible for small awards, diminishing the overall impact of the funds in encouraging students to go to college who otherwise wouldn't have. Hauptman also is concerned that colleges whose students receive extra Pell funds will use it to replace institutional aid funds they would have provided, rather than reducing the students' loan burdens.

In addition, making the higher education tax credits refundable (so that they are available to families that pay less in taxes than they would receive in education tax breaks), as both the House and Senate stimulus bills would do, makes the tax breaks less useful as a tool for helping middle-income families and increases the overlap with the Pell program, Hauptman said.

Despite those and other concerns expressed at the policy institute's forum, college and student groups came out of the woodwork Wednesday to cheer the House passage of the stimulus legislation, which is not surprising given the dire financial situation that many institutions are in, and the additional strain the economic downturn is putting on families' ability to afford college.

And even as they fought off Republican criticism of the legislation, Democratic supporters of the bill in Congress acknowledged its imperfections, or at least the extent to which -- as analysts like Hauptman and Applegate suggested -- it won't necessarily further all of the policy goals they might like.

On a call with reporters Wednesday before the House vote, Rep. George Miller, the California Democrat who heads the House Education and Labor Committee, said he recognized, for instance, that the stimulus bill would do little to deal with the House's concerns about whether colleges were raising tuition too fast -- an issue that lawmakers tried to confront in last year's renewal of the Higher Education Act. "I suspect the dire economic condition of the states will overwhelm" steps Congress took last year to punish states that cut their funding for higher education and to try to embarrass colleges that raise their prices the most.

"I would hope that some of this money [Congress plans to send to the states for education] might lead them to reconsider tuition increases," Miller said. And while Congress plans to continue its oversight of how colleges spend their money, he said, the stimulus bill may be an exception, because "we have to treat this as an emergency."


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