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Bush Education Budget Is 'Mixed Blessing'

Higher ed should expect more bad news than good as Congress tackles spending.
University Business, Apr 2005

As expected, funding issues occupy center stage for the higher education community following release of President George W. Bush's proposed budget for fiscal 2006.

The presidents of the six major post-secondary advocacy organizations in the capital, in a joint statement, termed the Bush budget plan "a mixed blessing for college students and their families."

They hailed the President's decision to increase spending on Pell Grants, to fully retire the accumulated shortfall in the program that now totals $4 billion, and to increase the amount of low-interest money that students can borrow in the federal student loan program. But they expressed disappointment with other budget proposals that would eliminate these long-standing programs:

The Upward Bound, Talent Search and GEAR UP programs that last year provided academic and personal support services to more than 700,000 low- and moderate-income secondary school students. The programs are "absolutely essential to help equalize access to college," the six presidents declared.

The low-interest Perkins Loan program, which has helped millions of Americans pay for college since it was created in 1958, initially as the National Defense Student Loans. It assisted more than 600,000 students last year.

Forty-eight education
programs overall are
targeted for termination
or severe budget cuts.

The Perkins Vocational Education Act, which impacts career and technical education programs at community colleges.

The Leveraging Educational Assistance Partnerships (LEAP) program that uses federal funds to generate significant amounts of state grant support for higher education.

"We strongly support the president's efforts to boost access to higher education and will work with the administration to make this happen. However, we regret that in order to increase access to higher education for some students, it is necessary to sharply reduce opportunity for many others," asserted the presidents of the American Council on Education (, American Association of Community Colleges (, American Association of State Colleges and Universities (, Association of American Universities (, National Association of Independent Colleges and Universities (, and National Association of State Universities and Land-Grant Colleges (

The post-secondary programs that Bush targeted were among 154 across the federal spectrum that the administration wants to reduce significantly or end altogether to keep spending in check in the $2.57 trillion budget. Forty-eight education programs overall, including many at the K-12 level, are tabbed for termination or severe cuts.

Not surprisingly, Republicans in Congress for the most part lined up to hail the proposal while Democrats railed against it. Immediate reaction aside, however, it is unlikely that the Bush budget cuts will emerge and become law exactly the way he has proposed them.

As often happens at budget time, the President's proposals wend their way through the labyrinth of the Congressional authorization and appropriations process, much political give-and-take will reshape the 2006 spending plan to try to satisfy competing interests.

But overall, the higher education community probably should anticipate more bad news than good as Congress tries to rein in domestic spending across the board.

Meanwhile, other finance-related issues also are emerging. The American Council on Education (ACE) notes that a report issued by the House-Senate Joint Committee on Taxation, identifying ways to narrow a gap of more than $300 billion between taxes owed and collected, includes several options that would affect higher education.

The 430-page report outlines proposals to curtail tax shelters, close loopholes, and address other areas of noncompliance. Among its 72 proposals, these would impact post-secondary institutions:

Combining the Hope and Lifetime Learning credits and the above-the-line deduction for higher education expenses into a single credit on a per-student basis on both graduate and undergraduate levels.

Repealing the exclusion for qualified tuition reduction by including such benefits in gross income and treating them as wages for employment tax purposes.

Modifying the FICA tax exception for students employed by a school, college or university.

Extending the Medicare payroll tax to all state and local government employees.

As with everything else at this early stage of the new Congress, it is not clear what the prospects are for enacting any of the report's proposals. ACE cites speculation that the Senate Finance Committee and maybe the House Ways and Means Committee will hold hearings this year to continue a push for reform in the nonprofit sector initiated last year.

Presumably, any large tax bill or any bill focused on reform of exempt organizations could include provisions affecting the higher education community.

In other developments, Democrats on Capitol Hill want Congress to pass immediate reforms to further simplify the paperwork for students and families applying for college aid. "You shouldn't need a Ph.D. or H&R Block to complete these forms," declares Rep. George Miller (Calif.), the senior Democrat on the House Committee on Education and the Workforce.

Miller says Congress is expected to rewrite the laws that govern student aid and the application process over the next two years, but unless immediate action is taken, it is unlikely that students will get much relief when applying for college aid next year.

Miller and Rep. Dale Kildee (Mich.), another Democrat on the education committee, also are calling for hearings into recruitment practices by for-profit higher education companies. They issued their request after a CBS 60 Minutes program report that the Department of Justice and Securities and Exchange Commission are investigating some for-profit colleges.

Alan Dessoff is a former reporter for The Washington Post and a freelance writer based in Bethesda, Md.

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