House committee evaluates increasing costs for higher education
As many college students headed back to school, the House Ways and Means Oversight Subcommittee, chaired by U.S. Rep. Peter Roskam (R-IL), held a hearing last week to discuss the increasing costs for higher education.
“We talk a lot about the increasing costs of health care in this committee,” Roskam said during his opening statements at the hearing. “Tuition makes those numbers look tame. Medical costs have increased over 600 percent over the last 40 years. But tuition and fees have doubled that, increasing over 1,200 percent—and they show no signs of slowing down.”
Roskam pointed out that the median income for a U.S. household is approximately $55,000 each year, while without any financial aid or scholarships, college students spend between $24,000 and $54,000 each year on their educations. Graduating students have an average of $33,000 in student loan debt.
The hearing was held to determine the cause of rising tuition and, among other things, whether U.S. tax policies were partly to blame.
Roskam said endowments and their investment earnings, which are exempt from taxes, was one area of concern.
"Congress provides that exemption to further a charitable purpose: better educating our nation’s students, preparing them for successful careers, and increasing the store of human knowledge through research," he said. "We understand that endowments can help assure financial stability to schools. But about 90 schools have endowments of more than $1 billion. Some of those schools have made great strides in providing exceptional financial aid to their students. Others have not."
Another area of particular concern was private schools and their executive compensation rates.
"For non-profit institutions, it seems like a lot of university presidents are making very good money," Roskam said. "In 2013, 42 private college presidents made more than $1 million. One way schools can justify their compensation as 'reasonable' to the IRS for the purpose of favorable tax consideration is to show that similarly situated institutions pay comparable salaries to their executives. That method points in only one direction: up."