By Carl Sampson
I had a few extra minutes so I thought I’d solve another one of those “impossible” political problems that send the folks in Washington, D.C., running around hollering and waving their arms.
It’s the cost of a college education. Everyone from the president on down says education is too expensive, but no one seems to know what to do about it.
I do. I have a little bit of experience with colleges, particularly their business offices. My wife and oldest son are in graduate school – George Fox and Marquette – and two other sons are undergraduates – Pepperdine and the University of Dallas.
Over the years, I’ve seen the good, the bad and the ugly of higher education costs. I know that most of the criticism is based on ignorance of how the system really works. In fact, the system works quite well. How else would Barack Obama, the son of a single mother, have been able to afford an Ivy League education and Harvard Law School?
To understand college costs, you must first buy a new car. That’s because the “price” of a college education is just like the sticker price of a new car. It’s a starting point for negotiating and nothing more. A few people pay the sticker price for college, but their last names are usually something like Gates or Buffett. In fact, many colleges set their prices high so students from wealthy families will pay more than those from middle class or lower class families.
And that’s the way it should be.
A private university will offer tens of thousands of dollars in grants to students from lower income families so they can afford to send their students there.
On the other hand, state colleges tend to be less flexible in what they charge. And most of the state’s financial aid is spoken for. That makes for an interesting situation: private colleges are often cheaper to attend than state colleges.
If there’s a flaw in the system its initials are FAFSA. That’s short for the Free Application for Federal Student Aid. If you’ve had a student in college, you’ve probably filled out one these. It’s not hard, as long as you’re willing to divulge everything there is to know about yourself except your shirt size.
The main problem with FAFSA is it includes all taxable money as income. If, for example, you took money out of your IRA retirement account to pay a student’s tuition it shows up as income. According to FAFSA you’re Bill Gates’ even though every penny went to college tuition. That limits your student’s eligibility for loans and grants. As the kids say, that’s messed up, and Congress would do well to fix it.
The other thing the federal government does is tax the income of college students – and then lend that money back to them as federal student loans. If I were to cook up a scheme like that, I’d be tarred and feathered. But Congress has the ability to set up such a system and then complain about it.
Another thing Congress could do – and, admittedly, this is a long shot – is make college tuition tax deductible for higher income parents and a refundable tax credit for lower income parents.
Then every American could afford a higher education without having to hock their future in student loans.
