"Stimulus Watch: College Tax Credits Combine Stimulus With Human Capital Investment"
Today, UCLA released its 43rd annual “American Freshman” survey, which shows that “the economic crisis is pushing growing numbers of college freshmen to look for part-time jobs, scrounge for financial aid and turn down admission offers”:
A record proportion, more than 49%, reported that they will need a job this year to help pay expenses, up from 47% the previous year. And 8.5% of students said their ultimate choice of college was strongly affected by not being offered financial aid by their first-choice campus, the highest such response since the question was first asked 24 years ago.
This comes on the heels of a study from the non-profit Delta Project — which used data gathered before the recession began — that found “college students are covering more of what it costs to educate them, even as most colleges are spending less on students.”
Making matters even worse, the economic downturn means states must cut their budgets, and funding for universities has been one of the first casualties. Governor Arnold Schwarzenegger (R-CA) has proposed a $66.3 million budget cut for the California State University system, while Arizona’s state legislature has identified “$314 million that could be cut from the universities over the next 18 months.”
Currently, the stimulus bill being crafted in Congress includes a temporary $2,500 tax credit to help pay for college, and a “measure to temporarily increase the maximum Pell Grant for undergraduates by $500.” Congressional conservatives — who are having a hard time supporting any stimulus measure that is not a corporate tax cut — have balked at these provisions, claiming that spending on education “will not provide an immediate stimulative impact.”
But one of the the key goals for stimulus spending is to put money into the hands of those who will spend it immediately, and these provisions would do just that. By definition, the credits must be used right now for a specific purpose, which will hopefully minimize waste and increase transparency. And if the credits make more students able to afford college, thus enabling universities to raise more revenue and avoid layoffs, then all the better.
Plus, the credits would provide more than stimulus. They are also an investment in human capital, and as former Secretary of Labor Robert Reich wrote, our human capital is “in short supply. And without adequate public funding, the supply will shrink further.” For all of these reasons, college credits are a winning proposition, and a no-brainer for inclusion in the stimulus package.