College Aid Process Resumes at Time of Political Transition

By Joshua Boak, The Blade, Toledo, Ohio

Jan. 15–With the holiday season of giving over, the season of borrowing for college has begun.

The new year ushered in the latest Free Application for Federal Student Aid, the form colleges use to calculate loans and scholarships from tax returns, mortgages, and stock holdings parents haven’t liquidated.

“It’s not difficult,” said Jeff Wallace, a marketing director for Cincinnati-based Student Lending Works. “It’s just an intimidating document.”

Yet unlike past years, Mr. Wallace said, this year’s FAFSA process occurs at a moment of political uncertainty, as Congress debates college affordability and the Ohio legislature considers turning its universities’ independent chancellor into a political appointee.

The Ohio government awarded Student Lending Works $200 million last year for low-interest college loans, but the burden of financing a college education has never been greater.

Before opening Senate hearings in December to examine higher education costs, Iowa Republican Charles Grassley questioned the core of conservative dogma: tax breaks.

“One thing is clear — the tax incentives we’ve passed have certainly done nothing to limit the rampant growth in tuition,” Mr. Grassley said. “Since 1976, college tuition and fees have risen by more than twice the economy’s overall price level. Imagine that!”

Government-backed scholarships, grants, loans, and tax cuts have enhanced the resources available to pay for college.

According to the Consumer Price Index, tuition has climbed at a clip just below cigarettes, which governments have saddled with multiple taxes.

The California-based Center for Public Policy and Higher Education ranks Ohio as the state with the highest college sticker prices.

Annual expenses at a state university consumed 42.4 percent of an average Ohio family’s income in 2005, up from 29.9 percent in 1999.

In Michigan, state university costs are 35.7 percent, which is still above the national average of 30.7 percent of a family’s income in 2005.

The higher costs don’t automatically translate into greater rewards for Ohio citizens.

More than 70 percent of Ohio’s college graduates stay, yet they are paid about $3,000 less a year than those who leave, according to a 2003 state government report.

Last week, Ohio House Speaker Jon Husted (R., Kettering) proposed making the state’s chancellor a cabinet-like post that reports directly to the governor.

The move effectively would transfer the Ohio Board of Regents’ responsibility to distribute higher education funds to Gov. Ted Strickland, who supports the change.

Mr. Husted said streamlining the state’s higher education system and awarding more oversight to the governor’s office were the “only” ways to improve the quality of Ohio’s colleges.

The potential restructuring has been proposed after years of declining state appropriations.

Adjusted for inflation, Ohio spent 22 percent less for each college student in fiscal 2004 than in fiscal 2000, according to the regents’ 2005 performance report.

Students made up the difference with increased tuition payments.

Ohioans can take solace in knowing that U.S. colleges still fare better than their Canadian counterparts in terms of government support, said Claire Morris, president and chief executive officer of the Association of Universities and Colleges of Canada.

Ms. Morris addressed the issue at a recent Bowling Green State University conference by looking at each nation’s total government expenditures on higher education.

About 25 years ago, Canada contributed $2,000 more to each of their college students than the United States.

That figure has since reversed, she said, with the United States now spending $5,000 more per college student than Canada.

As a result, class sizes have surged north of the border, while student-to-faculty ratios remain stable in America, Ms. Morris said.

But more government funding is no assurance of lower tuition prices or a better education, said Ohio University economist Richard Vedder, who served last year on the U.S. secretary of education’s commission on the future of higher education.

With the population’s inelastic demand for college degrees, Mr. Vedder said, government funding and incentives often have the unintended consequence of fueling tuition increases.

“Colleges raise tuition because they can get away with it,” Mr. Vedder said.

“When someone else is paying the bills, you’re less sensitive,” he said.

Contact Joshua Boak at: jboak@theblade.com or 419-724-6728.

—–

Copyright (c) 2007, The Blade, Toledo, Ohio

Distributed by McClatchy-Tribune Business News.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.