Online NewsHour: Series of President's Proposals: Education February 10, 1997

PRESIDENT'S PROPOSALS: EDUCATION

FEBRUARY 10, 1997

TRANSCRIPT

We now begin a series examining President Clinton's agenda for his second term. Throughout this week we'll take an in-depth look at various proposals the President detailed in his State of the Union speech last week. First up, education. Charlayne Hunter-Gault has more.

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ELIZABETH FARNSWORTH: Tonight on the NewsHour we begin a series examining President Clinton's agenda for his second term. Throughout this week we'll take an in-depth look at various proposals the President detailed in his State of the Union speech last week. First up, education. Charlayne Hunter-Gault has more.
CHARLAYNE HUNTER-GAULT: The President devoted a major part of the State of the Union address calling for a national crusade to improve American education. A key component in this crusade is making college more affordable. To that end, the President proposed increasing Pell grants, money available to needy students, to $3,000 a year; giving a $10,000 tax deduction for the first two years of college tuition or job training; allowing tax-free IRA withdrawals for families making under $100,000; creating Hope scholarships, $1500 tax credits for the first two years of college. This is based on a similar program in Georgia. Today, as we heard earlier, the President took his message on the road and spoke this morning to the Maryland general assembly.
PRESIDENT CLINTON: I just came back from Georgia. Sec. Riley and I went to Augusta. Two hundred and thirty thousand people in the state of Georgia who maintained a "B" average have had their tuition and their school books paid for by the State Hope Scholarship program. In a representative crowd there, I had person after person after person of all ages telling me I was a Hope scholar. I had a chance to go to college. I never could have done it otherwise; I wouldn't have made it otherwise. There is no better expenditure of our money. It will raise the per capita income of the state more quickly. It will get over inequalities and income groups more quickly, and it will bring people together for a stronger future more quickly than anything else.
CHARLAYNE HUNTER-GAULT: For a debate on the President's proposals we turn to two education experts. Stanley Ikenberry is president of the American Council on Education, an association representing accredited two- and four-year colleges and universities nationally. Prior to his work on the council, Ikenberry was president of the University of Illinois for 16 years. Eric Hanushek is director of the Wallace Institute of Political Economy at the University of Rochester. As Professor of Economics and Public Policy, he's done extensive research on education spending. And starting with you, Mr. Hanushek, is the President on the right track with his education proposals?
ERIC HANUSHEK, University of Rochester: (Rochester) Well, I think the emphasis that he's placing on education is entirely appropriate. The future of our country really depends very strongly on our ability to educate the population. On the other hand, the real problems and where he ought to be placing his energy, in my opinion, is elementary and secondary education. There is a lot of evidence that our higher education system is doing very well and that the graduates of our higher education system are succeeding. They're getting vast rewards for being educated. The large amount of subsidy that goes to the higher education students does not seem warranted because it's unlikely to have much impact on who goes to college.
CHARLAYNE HUNTER-GAULT: All right.
ERIC HANUSHEK: I say that--if I could just add, that was really a statement about the tax deductions, which are the largest part of this program. Pell grants I think are entirely warranted and are a very good part of this whole program.
CHARLAYNE HUNTER-GAULT: All right. We'll get to those specifics in just a minute. Let me get to you, Mr Ikenberry. What do you think, the President on the right track, or--
STANLEY IKENBERRY, American Council on Education: Basically, I think it's a strong package. I think the fact that education at all levels really is being given a high level of priority by the President. I think that's certainly--I agree that is the major good news here. But also in terms of the higher education segment I think that the breadth of the package viewed as a whole, it's a strong package, and many aspects I think it's an innovative package.
CHARLAYNE HUNTER-GAULT: But what about Mr. Hanushek's argument that the amount--subsidy doesn't, you know, affect who goes to college, it's not going to have that big an impact?
STANLEY IKENBERRY: I think from a practical standpoint viewed from the standpoint of students and parents who are worrying about how to gain access to college and the options that are available for them, the package will make a difference. For example, I visited--I did go to Georgia, an opportunity of two or three months ago, and the reports there are uniformly positive in terms of the ability of students not only to go to college when they might not have gone earlier but to be able to have more options that are available to them, more choices. So I think this is about access. I think it's about choice, and ultimately I hope that it will also be about quality.
CHARLAYNE HUNTER-GAULT: You don't accept--you heard what Mr. Ikenberry just said about the access and so on in Georgia, that--you just don't buy that?
ERIC HANUSHEK: Well, I think access is the real question, but the way the program is structured is that it gives large windfall gains to families with up to a $100,000 income, where they would be sending their children to college anyways. We're using the tax system to provide middle class tax relief in a very peculiar way for those who are going to go to college. These are the winners of our system. The people who go to college and complete college are the winners in the future labor market. It's the people who don't who are the losers. So it doesn't seem to make sense to me to use our tax system to provide even larger subsidies. They'll make it in the labor market. It's the other people we should worry about.
CHARLAYNE HUNTER-GAULT: He's right about that, isn't he, Mr. Ikenberry?
STANLEY IKENBERRY: Well, I think you have to look at the package ahead as a whole. The first piece that I think tends to get lost in this debate is a very significant increase in the size of the Pell Grant award that goes to the very most needy students.
CHARLAYNE HUNTER-GAULT: Well, he just said--Mr. Hanushek just said he approved of that, right, Mr. Hanushek?
STANLEY IKENBERRY: And he approves of that.
ERIC HANUSHEK: Absolutely.
STANLEY IKENBERRY: That increased $270 this year; under this proposal it would increase another $300. The other aspect is important as well because the Pell Grant helps those students with family incomes of around $30,000 or less. The tax programs by and large will also help the students who are in the middle income brackets, thirty to sixty thousand dollar-a-year income, would receive the bulk of this--of the support, or the aid that would come through the tax program.
CHARLAYNE HUNTER-GAULT: Okay. Now, is that the Hope--are you talking now about the Hope--
STANLEY IKENBERRY: That's the Hope program.
CHARLAYNE HUNTER-GAULT: --program. And that's the $1500 tax credit for any student--
STANLEY IKENBERRY: Yes.
CHARLAYNE HUNTER-GAULT: --maintaining a "B" average and staying off drugs.
STANLEY IKENBERRY: And I think the important thing is to view the program as a whole, the Pell Grant on the one hand but also opportunities to relieve the stress that many middle income families now face also as they look at the challenge of sending youngsters on to college.
CHARLAYNE HUNTER-GAULT: Relieving the stress of middle income families who are facing similar strains as you just heard, Mr. Hanushek.
ERIC HANUSHEK: Well, it certainly does relieve the stress. I know that myself, having send two children to college recently, that I would like to have somebody else helped to have paid for them. But the simple matter is that they did complete college, and when they weren't helped, they still completed college, and they're going to succeed. And that's the whole situation as far as I'm concerned.
CHARLAYNE HUNTER-GAULT: Mr. Ikenberry, why do--
ERIC HANUSHEK: The Pell grants--
CHARLAYNE HUNTER-GAULT: --why do the middle income people--stress--okay, that's one point--but why do the vast majority of middle--this scholarship isn't limited--why do middle class people need this scholarship or tax credit?
STANLEY IKENBERRY: Well, I think there are two or three aspects here. One is that college costs over the last ten or fifteen years have gone up more rapidly than inflation. They're better under control now than they have been in the past. The rate of increase is lower; nonetheless, I think the stress has increased, and, in part, these proposals being made by the President, I think, and being considered independently in other states are coming about as a result of that factor. Another aspect that I think that every family needs to face, particularly those with incomes of thirty, forty, fifty thousand dollars a year, is not just gaining access to college but having some opportunity of choice among options. And this--from the Georgia experience--was one of the more significant impacts there. So I think it is really helping to increase the access as well as the choice to higher education opportunity.
CHARLAYNE HUNTER-GAULT: Do you feel the same way about the $10,000 tax credit as well, Mr. Hanushek?
ERIC HANUSHEK: Well, I agree completely with Dr. Ikenberry that, in fact, providing choice to a wide range of students and their families is important, although my preference for providing choice would be to provide it through unsubsidized loans. There's no reason why we have to subsidize this because college is an awfully good investment. People make their money back, but providing the funds so that the families can make it through that difficult financial period makes sense, but we can do that with loans. My absolute preference is to provide loans that have the income contingent repayment feature that is present in some of our current federal loans. But I don't see any reason to subsidize college. Access and subsidy are not the same things.
STANLEY IKENBERRY: Well, I think the point here is to remember that the tuition tax credit of $1500 a year for the first two years only of college is just one piece of a much broader package. So the student attending the University of Illinois, for example, with roughly the expenditure expectation of $10,000 a year for a resident student, a resident of the state of Illinois, over a four-year period, they're going to have to rely on help from their parents. They're going to have to rely on student loans. They're going to have to rely on Pell grants and the Illinois State Scholarship Commission. And what we're talking about here is simply one more assistance that will be able--be available to students and to financial aid officers to put together a complete package.
CHARLAYNE HUNTER-GAULT: What about the other argument that Mr. Hanushek made, that the money would be better invested in elementary and secondary school than higher education?
STANLEY IKENBERRY: There's no question but what elementary and secondary education in this country may be the number one challenge facing America, but it is not a matter of either or. I think education needs to be viewed as a seamless web. And we need quality education really at all levels of this country.
CHARLAYNE HUNTER-GAULT: Mr. Hanushek, briefly, the argument that this is going to increase the number of students going to college and, therefore, raise tuitions, is that--is that something that should be seriously considered?
ERIC HANUSHEK: Well, there's very little evidence that a program like this will have much impact on the numbers of students going to college. It may affect where they go to college, as Dr. Ikenberry had mentioned, but it won't have much on the numbers going.
CHARLAYNE HUNTER-GAULT: But isn't that the point, Mr. Ikenberry, to increase the number of people going to college? Is there evidence to show that there will be more?
STANLEY IKENBERRY: Certainly one would--I don't think there is evidence, in part, because we don't have the precedent of this kind of a program, but certainly this program ought to--if it does anything--increase access for those who otherwise might have been denied it, but I think I would agree also that probably choice more options--more opportunities--would probably be even a greater impact.
CHARLAYNE HUNTER-GAULT: All right. Well, Mr. Ikenberry and Mr. Hanushek, thank you for joining us.
ERIC HANUSHEK: Thank you for having me.

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