Magazine article Black Issues in Higher Education

Washington UPDATE: Tax, Budget-Cutting Plans for Education Face Criticism

Magazine article Black Issues in Higher Education

Washington UPDATE: Tax, Budget-Cutting Plans for Education Face Criticism

Article excerpt

Washington UPDATE: Tax, Budget-cutting Plans For Education Face Criticism.

Both Black colleges and low-income students would lose under proposals in Congress to tax schools based on their loan volume and end the new experiment with direct lending, education leaders say.

The tax plan, proposed in the Senate, would assess colleges at a rate equal to just under 1 percent of their total student loan volume. Republican proponents of the plan call it essential to help meet government budget targets.

The House of Representatives is proposing an end to President Clinton's direct-lending experiment to make up similar savings. Xavier University, Tuskegee University, North Carolina Central University and Clark Atlanta University are among those participating in this program.

"Both plans would be bad for HBCUs," said Krista Beverly, government relations director for the United Negro College Fund. "The fees would be very burdensome on Black colleges because they serve a more loan-dependent population," she said. "Schools with the least amount of resources will have to pay a higher rate proportionally."

Senate Republicans hope to raise $2 billion by taxing schools at .85 percent of their total dollar volume in student loans. The GOP originally proposed a 2-percent tax rate but later scaled it back to the lower level after criticism.

However, the .85-percent tax still would exact a toll from colleges, say Democrats who oppose the measure. The State University of New York (SUNY) system would face a tax of $4 million and Rutgers University, $700,000, according to these estimates. A school with a smaller loan volume, such as Chicago State University, would face a tax bill of $62,600.

Beverly said any amount -- even a small tax -- could hurt Black colleges. "Even if it's only $30,000, $50,000 or $100,000, that's a lot for our institutions," she said. The Senate may add a provision prohibiting colleges from raising tuition to cover the tax. Such a move may protect students but could force a small Black college to lay off professors or other staff, she said.

Democrats on Capitol Hill also attacked the plan, developed by Sen. Nancy Kassebaum (R-KS), who chairs the Senate Labor and Human Resources Committee.

The plan "strikes at the heart of the federal commitment to higher education," said Sen. Edward Kennedy (D-MA). …

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