Carrots and Sticks

For years, federal lawmakers have been divided over how best to make college more affordable. For the most part, Republicans have called for reining in rising college prices. Democrats, on the other hand, consistently have pushed for increased spending on student aid to keep college within the reach of low- and middle-income students.

That's why college leaders were so unhappy last week when House Democrats introduced a bill aimed at curbing the growth in tuition increases. The legislation, which would also significantly increase spending on student aid, includes some proposals first introduced by Rep. Howard P. (Buck) McKeon (R-CA) that would shine a spotlight on colleges that continually raise their sticker prices more than twice the rate of inflation.

Predictably, lobbyists for private colleges blasted the bill for imposing price controls on higher education. But what this critique misses is that the legislation that the House Committee on Education and Labor approved last Wednesday night addresses college costs in a much more balanced fashion than Mr. McKeon's proposals ever did.

The bill takes a sensible, carrots-and-sticks approachpunishing the worst offenders by putting them on an "affordability alert status" but rewarding those colleges that keep their costs low with increased need-based aid. Colleges that increase tuition at levels equal to or less than the "Higher Education Price Index"an index created by researchers that hasn't yet been put to usewould get a 25 percent increase in their allotment of Pell Grant funds for each Pell Grant recipient. Colleges would also be rewarded if they provided families with "truth-in-tuition" pricinga policy that the New America Foundation and Higher Ed Watch proposedmeaning that they guarantee that students pay the same level of tuition or only slightly more during their college years.

The legislation also addresses the single most important factor driving tuition increases at state colleges and universities, which educate about 80 percent of students: declining state support for higher education. Under the bill, states would be required to maintain their "commitment to affordable college education"providing at least as much money to its public colleges as it has on average in the preceding five yearsor risk losing federal student aid funds it receives through the Leveraging Educational Assistance Partnership (LEAP) Program. The LEAP program, which was created in 1972, matches each dollar that states commit to need-based financial aid. Higher Ed Watch applauds this proposal because we believe that it is essential for Congress to address why costs are increasing, not just impose regulations on the outcome. Colleges have some, but not full control over costs, and the House bill acknowledges that fact.

The legislation certainly isn't perfect. The provisions may be overly complicated in that they measure the growth in college prices against two different indexesthe Consumer Price Index, which varies significantly year to year, and the Higher Education Price Index, which has never been used before. Perhaps it would be better to go back to the drawing board and have the Bureau of Labor Statistics work with colleges to develop higher-education price indices that more accurately reflect changes in college costs, as Senate Democrats are proposing.

In addition, policymakers need to be careful that when they penalize colleges for significant tuition increases, they don't inadvertently punish low-cost institutions, given that a minimal tuition increase could translate into a large percentage change. The legislation tries to address this concern by exempting one-quarter of the least-costly institutions in each sector of higher education from the sanctions. In other words, the lowest-cost community colleges, state colleges, private colleges, and for-profit institutions would not be punished. Whether these exemptions go far enough remains to be seen.

Still, as much as college leaders and lobbyists (as well as Governors and state legislators) don't want to hear it, this legislation sends a message: the status quoever-escalating college pricesis no longer acceptable. Democrats and Republicans alike are tired of increasing spending on student aid, only to see their efforts squandered by colleges continually jacking up their prices.

The fact Democrats are offering these proposals shows that spiraling college costs have become impossible for Congress to ignore. They recognize that that they won't be able to expand college access markedly without addressing the nexus between cost and affordability.