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Office of the Chancellor / Public Affairs
Tuesday, March 9, 2004

Chronicle of Higher Education 3-12-04

Plan to Punish Big Increases in Tuition Is Dropped
Republican sponsor says colleges are doing better at controlling costs


To the great relief of higher-education leaders, a key congressman has abandoned a proposal that would have punished colleges for big tuition increases.

Rep. Howard P. (Buck) McKeon, the California Republican who heads the principal subcommittee on higher education in the House of Representatives, announced last week that he was withdrawing the bill (HR 3311) that would have prevented some institutions from participating in a few federal student-aid programs.

The congressman's decision was a big victory for college advocates who have been vigorously lobbying against the proposal for months. They said they were especially happy that the plan would not make it into comprehensive legislation Mr. McKeon is expected to introduce in the next couple of weeks to renew the Higher Education Act, a process called reauthorization.

"We appreciate Rep. McKeon's willingness to re-evaluate his proposal and move ahead in a way that keeps the financial struggles of America's college students front and center during reauthorization," said David L. Warren, president of the National Association of Independent Colleges and Universities.

Mr. McKeon said he made his decision to drop the college-cost bill because he was encouraged by steps that some institutions have taken in recent months to curb their tuition growth. As an example, he cited colleges that have chosen to freeze tuition or reduce the need for students to take out loans, such as George Washington University and the University of Virginia.

"I am delighted that my bill successfully sent a strong message to colleges and universities that more must be done to rein in the cost of tuition and fees," the congressman said. "More and more institutions today are announcing voluntary steps to avoid excessive tuition hikes that hurt parents and students. This is a victory for low- and middle-income students."

But some political observers said that Mr. McKeon was forced to abandon his effort because he has been unable to build political support for it, even among his Republican colleagues. Fiscal conservatives, in particular, complained that the plan would impose price controls on colleges that would inevitably lead to a deterioration in the quality of academic programs.

Noting that tuition increases at public colleges continue to rise by record levels, Democratic lawmakers last week scoffed at Mr. McKeon's explanation for his decision.

"Despite efforts by a number of colleges and universities to make tuition affordable, the facts show that tuition continues to rise rapidly," said Rep. George Miller of California, the ranking Democrat on the House Committee on Education and the Workforce. "It is more likely that McKeon abandoned his plan because of the intense criticism it rightly sparked."

'The Wrong Approach'

Mr. McKeon unveiled his proposal a year ago in a speech to lenders. Under the plan, colleges that increased their tuition and other costs of attendance by more than twice the rate of inflation for two years in a row would have lost their eligibility to participate in all of the federal student-aid programs.

College lobbyists attacked the plan, saying that it ultimately would punish the students that the congressman was trying to help by removing their aid. Democratic lawmakers announced their opposition to it, and some Republican legislators privately expressed strong reservations.

Mr. McKeon agreed to make significant changes in the plan to try to win over his colleagues. In legislation he introduced in October, he softened the penalties. Under the bill, for example, no college would have been in jeopardy of losing student aid until 2011. In addition, the bill would have exempted many low-priced colleges.

Also, students at colleges that were punished would not have lost their eligibility for Pell Grants and federal loans. Instead, penalized colleges would no longer have been able to receive money from "campus-based" aid programs, including Federal Work-Study funds. Campus-based aid is distributed by the government to colleges, which add their own dollars to the programs and then give the money to students.

Despite Representative McKeon's efforts, many Republican lawmakers remained unpersuaded. Rep. Scott McInnis, of Colorado, circulated a letter in the House criticizing the legislation as taking the wrong approach and creating "a number of dangerous precedents."

"By sanctioning institutions that raise their tuition above an arbitrary level, the bill would, in effect, place federal price controls on colleges and universities," Mr. McInnis wrote. "History has shown us that price controls do not work and oftentimes result in negative unintended consequences."

In addition, several Republican members of Mr. McKeon's subcommittee and the full education committee came out against the bill. Rep. Fred Upton of Michigan, for example, said he opposed the legislation because it offered "an extreme solution" to the problem. Rep. Max Burns of Georgia agreed, saying that Congress should look for "a more positive" approach.

Perhaps most damaging to the California congressman's efforts, however, was the decision by Bush administration officials not to back the bill.

In an interview with The Chronicle last month, Sally Stroup, the Education Department's assistant secretary for postsecondary education, made it clear that the administration would not support Mr. McKeon's proposal. "What we are trying to determine is, what is the best solution for addressing this issue, short of having the government try to control tuition, which is probably not where we want to be," she said.

Even so, Mr. McKeon is planning to include some elements from his college-cost bill in the reauthorization legislation.

Placed on Watch List

Under the bill he plans to introduce soon, colleges that increase their tuition and other costs of attendance by more than twice the rate of inflation for three consecutive years would be required to provide the government with an explanation of the factors contributing to the jumps. In addition, the colleges would have to outline the steps that they planned to take to slow down the rate of the increase.

If colleges failed to comply with that plan after two years, the institutions would be placed on a government watch list and would have to provide the department with a detailed accounting of all of their costs and expenditures, which would be made public.

College leaders and lobbyists do not like the idea of having their institutions' prices judged against the consumer-price index. They believe that there are better measures that capture what they do, such as the Higher Education Price Index, which was created by a group called Research Associates of Washington to monitor the cost of running a college.

It is unclear, however, how hard the college groups will fight against this measure. Instead, they struck a conciliatory tone last week, praising Mr. McKeon for making a decision they had hoped he would make.

"We applaud the chairman's leadership in addressing the issue of college affordability, and we share his commitment to America's students," the American Association of State Colleges and Universities said in a statement. "We support his decision and understand his obligation to students and parents regarding accountability in college costs."