Congressman Tom Reed (R-N.Y.) challenged colleges and universities across the country to recognize the “crisis” of the rising cost of college tuition, which he said is saddling students with debt in an interview with The Sun Wednesday.
Reed spoke about his work on the REDUCE Act — which mandates that colleges and universities with endowments greater than one billion dollars must use 25 percent of the returns on the endowment for financial aid. He said he hopes it will serve as a vehicle to “not only bridge us through this immediate crisis, but to get to the long term solution which is bringing college costs down.”
Although many people consider reducing the cost of college a Democratic issue, Reed said the issue is a major priority for him and his team.
“There’s Republican leaders that often many folks chastise or summarily dismiss that we don’t care,” he said. “I care deeply about this and I think there’s many Republican leaders that are joining us in this effort to say ‘we need to tackle this issue.’”
Reed said he believes Donald Trump — who he has endorsed for President — could be a major ally in this effort.
“One of the reasons we made the endorsement that we did is because we want to use our position in a positive way, and if we can influence people like Donald Trump, Ted Cruz, John Kasich and weigh in on the presidential election to say this is a priority that we are working on and we think you should share this as a priority,’ we will continue to do that,” Reed said.
He added that despite his endorsement of Trump, he believes that whoever is in the White House will be an ally in the fight against the rising cost of college.
“It is an issue that doesn’t know left or right,” Reed said. “It is an issue that impacts kids, and that is something that should bring us together strongly.”
The bill was criticized last year by Cornell administrators, including President Elizabeth Garrett, who at the time said that although those who support the legislation have “their hearts in the right place … their methods won’t succeed for the goals they have in mind.”
John Plumb — who is running against Reed in the November elections — said that Reed’s approach “doesn’t solve the problem of college being unaffordable or the problem of high student loan debts.”
“Reed’s claimed interest in student aid rings hollow given that he voted just last year to slash Pell Grants, which would hurt our rural middle-class families and college students who rely on that program to pay their way through school,” Plumb said in a statement to The Sun. “This is just one more example of Congressman Reed trying to cover up his six years of doing nothing at all. Our students deserve real solutions, not political stunts — and they deserve a new member of Congress who knows the difference.”
Joel Malina, vice president of university relations, said in October that taking money from Cornell’s endowment could be a short-term solution, but that it would have unintended consequences in the long run.
“Taxing or otherwise tapping into an endowment’s principal investments might satisfy short-term demands — but would also cheat future generations of the educational programs and financial aid that today’s endowments support, and violate state laws that require prudent and careful management of endowment funds,” he said.
Reed responded by saying that there has been confusion surrounding the bill and that he has been working hard to clear up any doubt about its implications.
“We’ve improved the framework of the legislation and making sure that we don’t move forward without having these conversations about the unintended consequences,” he said. “There was some confusion early on in the conversation that we were talking about the principle of the endowments, but we were talking about the income coming off of the endowments.”
Colleges and universities receive preferable status under the tax code, allowing donations to be tax deductible and returns off of endowments accumulate tax free.
However, despite mostly altruistic missions that benefit the public good, some universities do not responsibly spend their money, according to Reed.
He said he hopes the REDUCE Act will bring about increased transparency in how colleges and universities spend their money.
“We’ve heard stories of football coaches, people making a donation to an endowment to get a tax deduction, that that money is used to pay off a football coach contract so that they can get rid of a football coach,” Reed said. “Is that really the charitable effort that we’re trying to recognize under the tax code?”
Reed also said that “if we’re going to have the government granting these charitable deductions and this tax free status to these funds, that it’s my role as a person who writes that legislation, being on the Ways and Means Committee, to ask the questions and make sure that the charitable endeavor of educating our kids is being maximized.”
Malina responded to Reed’s comments by saying that the administration will review the REDUCE Act and added that “Cornell remains committed to providing robust financial support to our students and to working to continually improve access to higher education for all Americans.”