Tuesday, May 02, 2006

General Assembly makes a smart move on higher education affordability

The General Assembly made a smart move this week by transforming Governor Blagojevich's proposal for a tuition tax credit for students' parents into a regular grant to students.

Governor Blagojevich plans to sell the state's portfolio of student loans to a private company, generating a ton of money. At least $90 million of those proceeds were to fund a tax credit for the parents of children who earned more than a B average in school. This laudable goal of making college more affordable suffered from a few distributive flaws (why parents and not children? why the wealthy and not the needy?) but had the powerful advantage of almost certainly polling very well. This was shaping up to be an example of politics-over-policy, as the Clintonian stategy of "targeted tax relief" as a message for a candidate works well in attracting wealthy suburban women (and other demographics with money).

To their credit, the General Assembly and the Governor dropped the idea of a tax credit and instead plan to put the money into regular grant programs.

Never let it be said that the General Assembly and Governor Blagojevich put politics over policy! Well, everyone does that sometimes, but this particular issue is a happy example of policy over politics. After all, funding the MAP program and even creating a new "MAP-Plus" program for kids from wealthier families will not play as well on the campaign trail as passing a college tax credit -- but they did it anyway. (How do I know that? If it's in a Blagojevich commercial, you know it plays very well, and the tax credit had been featured prominently in his commercials.)

I'll repeat: Governor Blagojevich and the Democratic General Assembly took a political hit in order to do the right thing on higher education affordability.

The bill creating the MAP-Plus program for kids ($500 for students, contingent on the sale of the loans -- not just a tax credit for parents) is HB 1945 (read House Amendment 2 here).

The Pre-School for All program, by the way, is HB 2013, and you can read that one here. I haven't been following that debate.

11 comments:

Anonymous,  11:34 PM  

It would make much more sense to not do the preschool program and instead use that money for college scholarships for Illinois children.

steve schnorf 8:20 AM  

On the other hand, if colleges weren't having to increase tuition by double-digit percentages because of a lack of state funding, then increased MAP grants wouldn't be quite as important.

Anonymous,  9:54 AM  

On the other hand, if there weren't so many loans/scholarships/grants/tax credits available, colleges couldn't keep raising their tuitions, because no one would be able to afford them. Ever notice that even as assistance for colleges keeps going up, it never gets any more affordable?

Anonymous,  9:55 AM  

Steve,

Can you truthfully say that everything the universities are doing is essential to education?

Dan Johnson 10:19 AM  

I hope that expansion of our university system by tens of thousands of students is discussed over the next 4-8 years, as I think investments in our higher ed system generate a lot of economic returns. When we raise the 3% state income tax (which we should do soon, especially on higher incomes), hopefully some of that revenue can fund higher education as well.

FightforJustice 2:12 PM  

MAP plus allows families with incomes up to $200,000 a year. I wonder if Dan feels that's appropriate targeting of subsidy where it's most needed?

Anonymous,  6:11 PM  

Wow, this is scary. I can't believe how anxious you all are to stick your grubby little hands into my pockets deeper . . . even more than Stroger in Cook County. When will you all determine that I've given enough to pay for everyone else's kids? I make just enough money to be too much for college loans, but I have to fund everyone else's kids because they can't.
And Dan, you want to raise my income tax? Remind me to keep my wallet safely tucked in a breast pocket when visiting the Capitol. Why, you may just think what's mine is yours . . .

I love this. You guys are a riot. Donate all your own funds to the needy. Leave me to decide where I want my money to go.

Anonymous,  7:57 PM  

First off I am glad (not) to see people getting personal on a serious issue like higher education.

Secondly, Dan is right the tax credit was extremely stupid and might of not even helped affordability and accessibility in higher education. While MAP PLUS is better I think an income threshold of 100,000 probably would have been more appropiate.

That being said the Sale of ISAC loans is a very bad thing and can potentially harm hundreds of thousands of student loan borrowers who will be at the mercy of for-profit companies like Sallie Mae. While need-based aid is important I think tax dollars should pay for it and not the privatization of student loans which increases borrowers risk and in return gives the state an undisclosed amount.

Dan Johnson 1:13 AM  

Well, $200,000 of family income is probably too high to really qualify as middle class. That's more like rich. I would be more comfortable if the limit included 75% of all people as the top 25% of income-earners can afford to pay for college without the assistance. Of course, many students can't access family income. I agree that the ISAC loans should only be sold under conditions that protect the students and maybe it's impossible to do that with a for-profit company.

Anonymous,  7:59 AM  

MAP will still receive about 11 million in state and federal dollars if the student loans are not privatized.

All of the universities will still receive their increases too if the loans are not sold.

I think it is important that we do not hurt finanicially needy students (student loan borrowers) to help other finanicially needy students (MAP and MAP PLUS recipients). Is that really how we want to fund need-based programs? Steal from poor Paul to pay poor Peter.

The biggest concern is that the gov privatizes all of the loans and spends only 60 million on MAP programs and spends the rest (250 to 450 million) on pet projects for himself. Or even worse since this is an inside deal he undersales all the loans for a very low amount to benefit some buddies.

monelson6 10:41 PM  

Hold the phone.. we are selling assets and spending the money on a program to cover it's costs? Where will the sustaining revenue for this come from after the loan money is spent?

And Dan Johnson-Weinberger - who are you kidding 3%? Yeah that may be the state income tax rate, but add in sales tax and property tax and then tell me we are not paying enough? Do you always focus on where to get the money and not on why we need to spend so much?

Anonymous makes a good point.. why do school tuitions go up so fast? If you look beyond just the state schools, all tuition rises far faster than core inflation. Does this make sense?

Best program of this nature I have seen was the Hope Scholarship in Georgia - any better than B average graduate of a highschool in Georgia gets free tuition and fees to any state supported school (or $3500 a year for any non state supported school) , paid for by lottery money! If they keep a B or better average, the scholarship goes for all four years.

But we blew it here in Illinois. Didn't we put lottery money twards education? Oh yeah, and took other education funding away and spent it elsewhere....

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