U.S. Rep. Tom Reed (R-NY) on May 22 introduced legislation which he said aims to rein in student loan debt by encouraging universities to cut higher education costs for all eligible students.
“We have to reduce the cost of education for the kids of today and tomorrow or their debt load will destroy their future,” Rep. Reed said in presenting the bill, the Reducing Excessive Debt and Unfair Costs of Education (REDUCE) Act.
Additionally, the REDUCE Act could serve as a “public pressure tool,” according to the congressman’s staff, that would incentivize institutions of higher education to lower tuition costs by requiring increased transparency for how they spend their federal funds.
Rep. Reed thinks that America’s working-class students in particular are being left out due to unfair and high college costs.
In most cases, the richer the school, the smaller the percentage of working-class students being served by the college,” he said. “We currently give these schools huge tax breaks and subsidies, and it is time they start serving the working-class taxpayer who supports them.”
According to a summary provided by the congressman’s office, provisions of the REDUCE Act would require colleges to keep tuition increases below the rate of inflation; would mandate reporting of “easily digestible information” on how federal funds are managed and spent; would require the nation’s wealthiest universities to distribute 25 percent of profits from their endowments to assist students from working-class families; would encourage higher education donors to target donations to low- and middle-income students; and would eliminate tax deductions for large, restricted college donations.
Dave Coulter, a resident of Chautauqua County and current student, said he appreciated Rep. Reed’s work on lowering the cost of college. “I’m just grateful that my employer has a tuition assistance program because if it didn’t, I would have a hard time continuing my education being a husband and a father of three children.”
A sizable number of U.S. colleges and universities have accrued hefty and largely tax-exempt endowment funds that receive millions of dollars annually in tax-deductible gifts, while also garnering government subsidies through current federal tax laws that “dwarf anything received by public colleges and universities,” according to a statement from Rep. Reed’s office.
While the tax exemptions and subsidies are designed to help offset tuition costs, that’s not always the case, his staff noted.
Instead, some schools have raked in billions and frivolously spent the funds while certain students get saddled with huge student loan debts, which collectively has long-term negative consequences for the nation’s economy, Reed’s staff said.