Over the last year, President Barack Obama and University President Mary Sue Coleman have discussed the rising costs of higher education. Today in Washington D.C., a University professor testified about the need to reform.
This morning, streamed live via the senate finance committee website, Susan Dynarski, a University associate professor of public policy and education, was one of five witnesses to testify before the U.S. Senate Committee on Finance about education tax incentives and tax reform.
The committee is led by Sen. Max Baucus (D–Mont.). Other guests who testified before the committee were Waded Cruzado, president of Montana State University; Lynne Munson, president and executive director of the advocacy group Common Core; Tax Foundation President Scott Hodge; and James White, director of tax issues for the U.S. Government Accountability Office.
Dynarski prepared a testimony for the hearing.
In her testimony, she said the goal of federal student aid and education incentives is to help people who are smart enough for college but not wealthy enough to pay tuition to afford their education, adding that the programs at the moment are inadequate.
“The current education tax benefits do little to get more people into college,” Dynarski said. “We should simplify and focus the tax incentives and coordinate them with the student aid programs.”
Dynarski added that despite growing tuition prices, education still helps people find jobs.
“Even with record-high tuition prices, a bachelor’s degree pays for itself several times over,” Dynarski said.
However, she said college is “unequal,” despite becoming attainable for some.
“Only 9 percent of children born in the poorest quarter of families earn a B.A.,” Dynarski said. “The figure is 54 percent, six times larger, for those with the highest incomes.”
Dynarski explained her worry of this gap setting the country up for a dim future.
“Growing education gaps between the children of the rich and the poor threaten this vision of economic mobility,” she said. “We are in danger of devolving into a rigid caste society where the children of the poor are destined for low education and menial jobs.”
Dynarski said higher education reform can help reduce the inequality, adding that earlier educational institutions are an important part as well.
“There is a role for post-secondary policy in shrinking these gaps … (but) it is important to understand the limits of post-secondary policy,” Dynarski said. “Gaps in educational attainment and achievement start early.”
Dynarski explained that the Pell Grant and the American Opportunity Tax Credit are the flagships of the student aid and tax incentive programs, adding that the Pell Grant is especially useful because it directs its funds toward the neediest students.
“Just 15 percent of Pell Grant recipients have household incomes above $40,000 per year, and just 3 percent over 60,000,” Dynarski said.
Dynarski added that both programs have doubled in size over the last two years.
In her testimonial, she outlined the reforms she thinks to be most prominent.
“The goals of reform should be to focus the incentives on those who are on the margin of attending college, to simplify the incentives so that families can understand and respond to them and to coordinate the programs,” Dynarski wrote.
She wrote that merging the Pell Grant and the American Opportunity Tax Credit into a single, refundable credit would make the student aid process less complex and would allow lower-income families to receive better benefits.
Sen. Ron Wyden (D–Ore.) attended the committee meeting and said the bill he introduced on Feb. 9 could help by forcing colleges and universities to release important data that parents and students can use to determine which institution is the best value.
Addressing this idea, Dynarski said she thinks Wyden’s bill would do good, if passed.
“I think (Wyden’s bill) would be a great step forward to have unified, uniform info about graduation rates, about prices and about employment rates and earnings of graduates from institutions,” Dynarski said. “The state of Florida has been doing this on its own, using its own data systems, but seeing a more uniform set of information across the country would be a great step.”
Baucus said the committee needed to find a way to simplify the federal student aid programs, which he thinks can be complex and confusing for Americans.
“Under current law, there are eight separate tax expenditures related to higher education, and these benefits use five different definitions of ‘eligible expenses,’ ” he said. “Taxpayers must calculate their taxes using each tax cut to determine which one works best.”
Baucus brought a chart — only one page out of 87 dedicated to how to obtain education tax credits — to the committee that showed the IRS questionnaire that families use to determine if they are available for education tax credits like the American Opportunity Tax Credit.
“Based on the complexity of this guide, one would think the IRS expected all of America’s future students to want to major in accounting,” Baucus said. “The Government Accountability Office will tell us today how this complexity affects families. They have found that many families often pick the wrong benefit and leave money on the table.”
Baucus said reform is essential for the U.S. education system to do its job properly.
“We need to make the system simpler for families, and we should improve these benefits for students. Through tax reform, we need to look at how we can achieve the greatest bang for our buck,” Baucus said. “Our entire system should work to help, not hinder, the pursuit of an education.”