New College Funding Plan Divides Silber, Educators

A bill pending before Congress that would radically change the methods of financing higher education in the United States has sharply divided educators, legislators, and economists in Massachusetts.

At one extreme of the debate are John Silber, president of Boston University and author of the controversial Tuition Advance Plan (TAF), and Rep. Michael J. Harrington '58 (D-Mass) who introduced the plan as a bill before Congress earlier this year.

At the other extreme in the debate over TAF--which would provide up to $15,000 in federally funded "advances" to college sophomores, juniors, and seniors--is Harvard's Office of Fiscal Services and some Massachusetts educators.

Caught in the middle is Otto Eckstein, Warburg Professor of Economics and president of Data Resources Inc., an economic think-tank that will issue report later this month applauding the basic concept behind the plan. However, the report warns student hardships and threats to institutional autonomy if the bill be adopted in its present form.

The TAF plan would require students who draw money out of the fund to pay back to the government the sum advanced plus a 50 per cent surcharge--through a 2 per cent withholding tax for each year their income exceeds $5,000. Because the loan would be paid back through the Internal Revenue Service, the bill's sponsors argue that the TAF would avoid the problems of default that have plagued past government loan programs.

"Perhaps we have been going about financing higher education the entirely wrong way," James Castello, administrative assistant to Harrington, said yesterday. "There is no reason that one generation should be financing the education of another generation--but the problem has only come to light since the cost of college has skyrocketed."

But R. Jerrold Gibson '51, director of the Office of Fiscal Services, said last week that students might have to forfeit grants and take the draw money from TAF, which they may pay back until they retire. "It is not terribly attractive to students," Gibson added.

Silber says that provision limiting college tuition hikes to the annual cost-of-living index is needed "to prevent colleges from abusing the plan," but Congressional sources indicate that the objections of several major universities, including Harvard, make it unlikely that the tuition limitations provision will survive committee review of the House bill.

"That is just Harvard's way of saying that they oppose the plan," Silber said last night. "If I had one-tenth of the college endowment in the U.S., I wouldn't want someone limiting my tuition charges either. Harvard's huge endowment disqualifies them from the discussion," he added.

"Actually, the idea is very similar to something I proposed in the 1950s," Eckstein commented last week. "But despite what Mr. Silber says about creating a self-supporting 'national education trust fund,' his projections about the cost of the government seem rather optimistic," he said.

According to Lawrence Olson, senior economist for the Consumer Research Division of Data Resources, TAF "responds to the college-financing crisis of the middle class. Data Resources Inc. is preparing a study on TAF for the Association of Massachusets Independent Colleges and Universities, which will take a position on TAF later this month.

"In essence the plan will make a lot of students poorer and a lot of parents richer over a transitional period of about 40 or 50 years," Olson said yesterday. He added that the plan could serve as a "disincentive" for students to earn higher incomes and thus pay back more of the loan each year.

"For a large loan it may be worth it; for a small loan the interest rate is pretty high," Olson said.

Even those supporting the bill say they are beginning to find inequities in TAF. "It is a hell of a lot better than the Tuition Tax Credit debacle, but Silber is going to run into some problems because he is fanatically committed to the provisions of the bill as it now stands," one Congressional source said yesterday.

Silber denied last night that he was "fanatically committed to the plan, saying, "I think the man who refuses to compromise is the man who refuses to do any good.