Paying for College: Equity of Clinton Plan Critiqued

President Clinton's ambitious plan to make college affordable to more Americans is getting caught in a tug-of-war over where most of the assistance should go: to middle-class families or to poor students.

His plan for college students relies heavily on a single mechanism to help fund it: the tax credit. But advocates for the poor say this mechanism won't help most lower-income families.

The debate over tax credits could complicate the passage of the most far-reaching federal overhaul of the nation's education system in 30 years. While Congress is likely to agree to much of the president's $50 billion spending plan, which includes school construction, teacher training, and higher academic standards, some lawmakers may balk at those provisions that call for tax cuts for the well-to-do.

Moreover, college affordability is part of a larger, longstanding debate over equal access to quality education in America - from grade school to post-graduate study. The federal student-loan program, created 32 years ago, is one way the government has tried to redress the problem by helping lower-income students afford college. Mr. Clinton's tax-credit plan would augment, not replace, that program.

"This is a middle-class tax cut," says Dimetrios Coupanos, policy director at the nonpartisan Concord Coalition in Washington. "Polls show the American public loves education, they love tax cuts, and they hate increased spending. So that's what they got."

"All this does is get people into college who would get there anyway," he adds.

Who's college bound?

This view has been bolstered by the release today of a new report by two education policy groups. The report, "Taxing Matters," indicates that the White House's emphasis on tax credits - rather than direct aid - will benefit the middle class more than the poor.

According to the report, only 58 percent of lower-income students go to college, compared with 87 percent of middle- and upper-income students. Of students who received financial assistance last year in the form of Pell grants, a federal education-aid program for the poor, two-thirds of the families earned less than $9,000 a year. Very few earn enough to itemize deductions or to receive the proposed tuition tax credits.

"The idea of financing higher education is great," says Jamie Merisotis, president of the Institute for Higher Education Policy in Washington. "The challenge is to find ways to promote affordability for middle-income families without detracting from efforts to support access for those with the greatest need."

Under the Clinton plan, the nation's investment in tax cuts would be five times greater than its investment in Pell grants, he adds. "We would not like to see lower-income families left in the wake."

Affordability yardstick

Traditional student aid, ranging from the GI Bill to the Pell grant program, does a better job of getting lower-income students into college, Mr. Merisotis says. The high-water mark of college affordability was 1979, when a Pell grant paid for 80 percent of the average tuition. That percentage has declined every year since, as tuitions rose and as lawmakers looked for ways to reduce the federal budget. Even though the Clinton plan boosts individual Pell grants from $2,700 per grant to $3,000, Merisotis says they would have to be raised to $5,000 to pay 80 percent of today's average tuition.

But White House spokesmen defend the president's plan, saying funding for the Pell grant program has been boosted by 25 percent over last year.

"There was concern last year that the package was overly weighted to middle-income families," says Jake Siewert, spokesman for the White House's National Economic Council. "So we redesigned the tax [incentives] to put more money into direct student aid."

Administration officials also say that increased spending for early learning under the Head Start program and a push for standards and testing in primary and secondary schools will raise the level of education for the rich and poor alike.

While many education advocates say the president's plan could be made more equitable, most call it a good first step.

"You have to do what you can with the political restraints," says Jane Hannaway at the Urban Institute in Washington. "We have a Congress that is more amenable to tax cuts than grants to the poor."