President-elect Donald Trump and members of Congress from both parties have called on colleges and universities to make a higher education more affordable for students with financial need, creating the possibility of bipartisan legislation becoming law in 2017. It is high time to do this, particularly for high-achieving, low-income students.
The schools would be wise to take voluntary action themselves, as public concern grows over rising tuition rates that are keeping many bright young people out of college at a time when a college degree is essential for many good-paying jobs.
{mosads}According to the College Board, before financial aid the average cost for tuition, fees and room and board at a public four-year college for an in-state student was close to $20,000 in the 2015-16 school year. At nonprofit private schools, the charge was almost $44,000, with many charging more.
A study in early 2016 by the Jack Kent Cooke Foundation, which I head, found that only 3 percent of students at our nation’s top colleges come from families with the lowest 25 percent of incomes, while 72 percent come from families in the highest income quarter. As a result, at these schools the working class is history, the middle class is being squeezed out and the wealthy are dominating. This is simply unjust.
One purpose of higher education institutions in this country is to be engines of social mobility. With only 3 percent coming from families in the bottom income quartile, the colleges have lost their way.
Senators Chris Coons (D-Del.) and Johnny Isakson (R-Ga.) introduced legislationin September to give selective colleges incentives to increase the number of low-income students they admit and to increase the graduation rate of such students. Colleges failing to do this would have to pay a fee to participate in the federal college loan program.
More recently, New York Gov. Andrew Cuomo has proposed that tuition at public universities in his state be free for students whose families earn no more than $125,000. Although tuition at the State University of New York is only about a third of the full cost of a higher education for students living on campus, the proposal is nonetheless a generous initiative that could help many thousands of students to meet their tuition bills if approved by the state Legislature.
Trump has brought up the issue of high tuition and endowments several times. For example, he said in Ohio in October that wealthy colleges have a responsibility to use more endowment funds to hold down tuition costs. “If colleges refuse to take this responsibility seriously, they will be held accountable, including by reconsidering whether those with huge endowments deserve to keep those endowments tax exempt,” he said. “We have a lot of power over the colleges. And they’re not doing the job of cost cutting.”
Last February, two congressional committees sent letters to 56 private colleges and universities with endowments of more than $1 billion each, inquiring about how they spend endowment funds. The followed a congressional hearing months earlier when House Republicans questioned why colleges with multibillion-dollar endowments were raising tuition.
Rep. Tom Reed (R-N.Y.), a vice chair of Trump’s transition team, issued a report in December proposing legislation to require colleges and universities with endowments of at least $1 billion to “to use at least 25 percent of their investment gains to reduce the costs of attendance for students from middle and working class families.”
These are all ideas with promise that merit serious consideration.
A report by the Education Trust (EdTrust) in August found that in 2013, 3.6 percent of U.S. colleges and universities — amounting to 138 institutions — held three-quarters of the endowment wealth of higher education institutions. All 138 schools each had endowments worth at least $500 million. These endowments should be used to admit more low-income, high performers.
About half of the 67 colleges and universities with the largest endowment examined in the EdTrust study spent less than 5 percent of their endowments in 2013. If those schools raised endowment spending to 5 percent they could generate an extra $418 million a year for student financial aid, the report found.
The growing focus on making college more affordable signals that Congress and the incoming Trump administration may be able to bridge partisan differences to benefit millions of students.
There should be a trade-off between a college being tax-exempt and it providing financially challenged students with robust scholarships. Today there isn’t. If the Trump administration fixes that, it will have done a very good thing for generations of smart students who have financial need.
Former New York City Schools Chancellor Harold O. Levy is executive director of the Jack Kent Cooke Foundation, which has awarded more than $152 million in scholarships to nearly 2,200 high-achieving students from low-income families and more than $90 million in grants to organizations that serve such students.
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