'Higher education is no longer a luxury, but a necessity," President Lyndon B. Johnson told Congress in 1965. Now, almost 40 years later, that necessity has taken on luxury-like costs for many parents trying to send their children to college. With elections just a few months away, lawmakers are hoping to find a way to make higher education more affordable for most Americans.

The legislation to do this will be a reauthorization of the Higher Education Act, the primary law regulating federal aid to postsecondary students and schools. Past reauthorizations of the law, first enacted in 1965 (PL 89-329), focused on helping students pay for college through loans and grants. But this year, Republicans and Democrats are taking separate, but similar, approaches that focus more directly on the rising cost of tuition at public colleges and universities.

Republicans want to penalize schools that do not find a way to curb student expenses, while Democrats aim to put the onus of cost reduction on the states. Both concepts have critics, though, who say they would rather see measures that help students and their families directly through more generous and accessible loan programs.

As College Costs Continue to Soar Students Rely on Federal Money
An estimated 16 million students — from teens just out of high school to adults changing careers — attend some sort of higher education institution, about 2 million more than in 1995. At the same time, the price of attending these schools has risen. Tuition at four-year public colleges increased 47 percent over the past 10 years, according the College Board, a nonprofit educational organization. During the same period, tuition at private colleges and universities rose 42 percent.

Constituents, already worried about jobs and health care costs, have added this issue to their list of concerns this election year. Rep. Howard P. "Buck" McKeon, R-Calif., said he constantly hears complaints about college costs in his suburban Los Angeles district.

Financial Aid Sources For Higher Education
"It affects every family, whether they are younger and thinking about having children or they have approached the age" when their children are going to college, McKeon said. "I see it everywhere."

House leaders have chosen to tackle the higher education law with a piecemeal approach. Last year, the chamber passed with little fanfare four reauthorization bills that addressed such issues as teacher training and loans, and graduate and international programs. (2003 CQ Weekly, p. 2646)

Less Carrot, More Stick
McKeon has sponsored legislation (HR 3311) that would exclude colleges from some federal aid programs if they increase their charges by more than a level tied to inflation. His bill is expected to be debated this spring — along with measures addressing student aid — possibly by the end of March.

"There's a lot of schools and they all seem to be wanting the federal money," said McKeon, who chairs the Education and the Workforce Subcommittee on 21st Century Competitiveness, which has jurisdiction over the issue. "We have had a gigantic carrot for many years. There's never been the stick.

"We have talked and talked and talked, and meanwhile costs keep going up," he said.

Democrats have decided to focus on states, many of which are struggling with budget crunches. Massachusetts Sen. Edward M. Kennedy, ranking Democrat on the Health, Education, Labor and Pensions Committee, has sponsored legislation (S 1793) that would try to discourage states from cutting higher education spending. Under his plan, states would not receive new federal higher education funding if they cut their own spending on public institutions more than 10 percent. House Democrats have sponsored a similar bill (HR 3519).

"We're not going to have a bait-and-switch program where the federal government increases its support for students and the states reduce their support," he said. Kennedy has said he wants to work with Committee Chairman Judd Gregg, R-N.H., to write a consensus Senate bill.

Ultimately, both sides may find that federal attempts to keep tuition increases in check will be insufficient given continuing state budget problems and the limited federal role in higher education, analysts and lobbyists said.

"I'm not particularly thrilled or excited about either the Democratic or Republican proposals trying to address this issue," said Donald E. Heller, associate professor for the Center for the Study of Higher Education at Pennsylvania State University. "I'd rather see them putting their focus on what the federal government can do in terms of need-based financial aid."

States traditionally have played the primary role in setting policy for public colleges and universities, with authority over funding and through oversight of such matters as admissions and construction needs.

Johnson Imperative
The federal government entered the picture in 1965 when Johnson called on Congress to help low- and middle-income families realize the college dreams of their children. Congress that year passed the Higher Education Act, providing loans and grants to make college more affordable. Each time the law has been reauthorized lawmakers have focused much of their attention on loans and other forms of student aid. The act was last reauthorized in 1998 (PL 105-244). (1965 Almanac, p. 270; 1972 Almanac, p. 385; 1998 Almanac, p. 9-3)

That commitment has grown through the years. The federal government provided $71.5 billion through various financial aid programs in the 2002-03 school year, an 11 percent increase over the previous academic year, according to the College Board.

The law also authorizes programs to help students complete high school and gain the skills to enter college, to train elementary and secondary school teachers, and to maintain historically black colleges and universities and other institutions that serve a predominantly minority population.

Congress typically has reauthorized the law in a bipartisan fashion, but this year some issues appear to be splitting along partisan lines. In addition to the question of how to keep tuition at a level most families can manage, lawmakers are expected to argue over the rules that allow students to consolidate loans more easily and if students should receive additional "legacy" benefits from schools a parent had attended.

The changing demographics of the typical college student further complicate the debate over making college affordable. More minorities have enrolled in college, a trend that is expected to continue. In 1960, minorities represented 7 percent of high school graduates; in 2002, that percentage had grown to 29, according to a report from the Council for Opportunity in Education. The report estimates the share minority graduates will grow to 40 percent by 2012.

But minority students as a group are less affluent than their white peers, thus less likely to be able to afford college and more likely to boost demand for aid. Non-Hispanic white families with college-age students had a median annual income of $67,500 in 2001, according to the council's report. Black families earned a median of $32,700, and Hispanics earned $35,100.

This demand has been reflected in an increasing number of students who have received aid through Pell grants, which provide up to $4,050 annual per person for low-income students, depending on their families' income level. Currently, about 5 million students qualify for Pell grants, almost 1 million more than when President Bush took office.

Older, Busier Students
In addition, today's college student is older — with an average age of 27 — and has a greater chance of having a full-time job while attending school. Many students must attend class on more than one campus to fit their required courses within their weekly schedule. That is likely to mean higher costs for those students.

"The world of higher education has changed dramatically in the last 10 years," said Terry Hartle, director of government affairs for American Council on Education, the major coordinating body for the nation's higher education institutions. But, he added, it has changed in ways that few states were prepared to handle. "Public policy is almost always reactive. When [states are] faced with huge budget problems, it makes it much harder to react."

Unlike the federal government, most states are required to balance their budgets every year, and shortfalls can mean limits in higher education spending by state lawmakers who view tuition increases as an unfortunate but necessary avenue to balance.

For example, California GOP Gov. Arnold Schwarzenegger proposed an $886 million spending cut for higher education in his 2004-05 budget to help close a $16 billion-plus shortfall. If his plan is enacted, community college fees would increase from $18 per credit to $26 per credit in 2004-05 and fees for the University of California and California State University systems would increase 10 percent for undergraduates and 40 percent for graduate students, according to the California Budget Project, a nonpartisan organization that tracks state policy issues.

McKeon, whose district includes a part of Los Angeles, says his bill might put the brake on college prices. The measure would put colleges on a watch list if they increased tuition and fees more than twice the consumer price index (CPI) over a three-year period. With an average annual 2.4 percent rise in the CPI over the past decade, that would limit college costs to less than a 10 percent yearly increase.

Institutions that continued to fail to take steps to reduce costs would lose eligibility to participate in campus-based aid programs such as work study, Perkins loans and Supplemental Educational Opportunity Grants. Those programs were appropriated $1.9 billion for fiscal 2004 and served 2.8 million students.

The American Council on Education estimates that 1,321 institutions would be put on the list if McKeon's bill were enacted.

University presidents point out that as much as 60 percent of their expenses pay salaries. Cutting costs, they say, would require larger classes, fewer seminars, and less-qualified teachers.

Hartle said that while colleges are under pressure to pare expenses, they also must devote resources to newer fields such as computer science and biochemistry — subjects that were in their inception just 20 years ago — or they might be less attractive to potential students.

College officials say they are being unfairly targeted because of a combination of state budget cuts and a lack of support for student aid programs that have not kept pace with inflation.

"Federal price controls — the centerpiece of your proposal — are an inefficient and ineffective tool that has never worked as intended, " David Ward, president of the American Council on Education wrote to McKeon last April. "While the appeal of price controls is easy to understand, their negative consequences — especially shortages and deterioration in quality — are inevitable."

McKeon's response to such criticism? "That's a cop-out," he said. "If they increase their costs more than the guideline then we'll say, 'Fine, do it, but we're going to hold back some of the funds that go to the schools. We'll give more to other schools that are keeping the cost down.' "

Pressure on States
Kennedy's bill would boost spending on student aid programs, but also require states to keep 90 percent of their previous year's higher education budget to be eligible for new federal financial aid. States receive aid through programs such as the Leveraging Educational Assistance Partnership (LEAP) program that provides matching funds to states for need-based aid programs. The program received $66.2 million in fiscal 2004, providing average annual grants of up to $1,000 for 169,000 students.

Kennedy said his legislation also contains incentives for colleges to make bulk purchases, joint faculty appointments, shared library acquisitions and appoint joint legal counsel to help states reduce their costs. Still, analysts said his bill suffers from the same problem as McKeon's: Ultimately students would be hurt under both measures.

"The fact is we're in a very difficult set of financial circumstances for both institutions and states," said David A. Longanecker, who was assistant secretary for postsecondary education in the Clinton administration and now serves as executive director of Western Interstate Commission for Higher Education.

"The states don't want to reduce their commitment to higher education, they just don't have the resources to support public services in the way they have [in the past]," Longanecker said.

In 1980, states provided 46 percent of the operating support for public colleges and universities, according to the American Council on Education. By 2000, that amount had been reduced to 34 percent. During the same period, tuition as a source of revenue grew from 13 percent to 18 percent.

"I don't think there is a heck of a lot Congress can do to influence states' decisions about appropriations and how much money they give to higher education institutions," Heller said.

Experts said that in the face of these cost issues, Congress should focus on what the act does best, providing aid to mostly low-income students.

Longanecker noted that some states are already focusing on such policies, such as Arizona, where universities had been struggling because of traditionally inexpensive tuition and a growing student population. The Arizona Board of Regents last year increased tuition at its three major universities by $1,000 during the 2003-04 academic term, bringing the annual cost for in-state undergraduate students to $3,593. While covering operating costs, the board also required that 14 percent of total tuition funds be devoted to needs-based financial aid, up from the current 8 percent.

"That may sound kind of bizarre, but that is the only way they can generate revenues and provide additional seats," Longanecker said. "The state doesn't have the resources to respond to the phenomenal increase in demand that is coming down the pike."