April 21, 2016

EDITORIAL: Tom Reed’s Misguided REDUCE Act

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The REDUCE Act — a piece of legislation that Congressman Tom Reed (R-N.Y.) is currently working on — mandates that colleges with endowments greater than $1 billion must use 25 percent of the returns on the endowment for financial aid. Reed said he hopes that this policy will help combat the rising college tuition and debt burdens that many young Americans face.

While Reed’s proposed legislation rightly seeks to tackle issues of affordability of and access to higher education, this policy would have damaging effects on colleges’ long-term funds. As administrator Joel Malina argued, “Taxing or otherwise tapping into an endowment’s principal investments might satisfy short-term demands — but would also cheat future generations of educational programs and financial aid that today’s endowment support.” If implemented, mandates like the REDUCE Act would also decrease the agency and flexibility that individual colleges have to steer their fiscal policy. Such hard-line requirements limits the conversation to increasing financial aid, confining the innovative approaches that colleges could take to combat rising high tuition costs.

Policymakers and college administrators cannot address the skyrocketing price tag of a college education increasing financial aid alone. From a rise in the number of college administrators to decreases in public funding for higher education, deeper issues at the national and individual college level underlie this problem. Colleges must look not only to increasing financial aid but also to reducing operational costs and the cost of tuition. Ironically, increases in financial aid also provide colleges with more leeway to hike up the price of tuition. Every year, Cornell administrators point to a rise in financial aid to justify annual hikes in tuition.

Reed’s strongest argument for the REDUCE Act is its potential ability to increase transparency and accountability in how colleges spend their endowments. While colleges often express a strong commitment to financial aid, actual policies — such as Cornell’s decision to switch from need-blind to need-aware financial aid for international students — brings that promise into question.

Ultimately, colleges should be allowed adequate room to implement innovative, cost-effective approaches towards higher education, and misguided policies such as Reed’s REDUCE Act would limit this ability. However, university administrators must also take advantage of this flexibility with responsibility and a clear commitment to making higher education more affordable for students.

  • Craig S Lyman

    Tom Reed has been the worst representative of our district in my lifetime, and I’m in my sixties! He’s been wrong on almost every single issue facing our country, including this one! It’s obvious that he’s been bought and paid for by corporate and industry lobbyists to the detriment of our taxpayers. I urge you to vote him out come November so that the concerns of the taxpayers take precedence over those of billionaires and multi-national corporations! John Plumb looks to be a much better alternative!

  • John Schumacher

    Tom is actually fighting for students. Cornell is sitting on tons of cash tax free. They get tax free status becuase of the they claim they are bettering society by educating students and they refuse to use that money to actually educate students! Isn’t giving scholarships to those who can’t afford to go to Cornell the best thing they could be doing with their money? John Plumb is owned by the money he gets from Cornell faculty for his campaign. He will put them before the students.