President Obama’s proposal to make the first two years of is a bold call to boost higher education access and affordability.
We agree with the goals of access and affordability, but believe there are better ways to get there. Why not increase Pell Grants, for example, which have a of helping low-income people afford a college education?
It doesn’t have the cachet of open access for those pursuing a degree or certificate, but it would better target the nation’s resources to those who most need help. And it would allow those who prefer to pursue an education at a range of other colleges the chance to do so, t0o.
It’s important to keep in mind that while Pell Grants, at a maximum of $5,730 per year, often are used for tuition, they can be used for other expenses, such as books, supplies, transportation, living expenses like room and board, and even dependent care for a student with dependents.
Covering those costs often is a substantial hurdle for students, forcing them to work long hours at low-paying jobs while trying get the education necessary to propel them into the middle class.
The president’s college proposals, which he amplified during his , also included discussion of tax credits. One of the would reduce the tax benefits of popular 529 college savings accounts. It would require taxes be paid on gains when people withdraw money from 529 accounts to pay education expenses. Currently, those withdrawals are tax free. The proposals would apply only to new contributions.
The argument is that the benefits of such accounts disproportionately go to households making more than $250,000 a year. Maybe so, but we would urge caution in tampering with this mechanism that has encouraged many middle-class families to save for college, too, when they otherwise might not have.
The president also has proposed a significant expansion of the American Opportunity Tax Credit, which provides a tax break for higher-education expenses of up to $2,500 per year for families making up to $180,000. That’s an idea worth exploring.
Clearly, there are a lot of moving parts to the president’s proposals to make higher education more affordable and competing ideas on the best way to do so.
While we don’t agree with all of the ideas, it’s an important discussion with great potential to help students overcome the financial hurdles that stand in the way of a college degree.
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