It seems that the higher educators are surprised that government tax credits often lead to universities raising tuition by the amount of the tax credit. Welcome to the real world of business and filthy lucre, professors! A guy selling towels at a street fair could have told them as much. From Inside Higher Education:

A Finance Committee spokeswoman confirmed late Thursday that in one of their last acts while their party still controls Congress, the panel's Republican leaders would hold a hearing 'that looks generally at whether tax breaks for tuition and universities' efforts to help low— and middle—income families are helping in an era of ever—increasing tuition.'

That statement was generally consistent, though somewhat vaguer, than what one Washington higher education official was told the subject of the hearing would be: 'a look at the relationship between federal tax provisions and tuition increases.' In other words, do federal policies that give taxpayers a deduction or credit for money they spend on college tuition — like, for instance, a proposal by the new Democratic majority in Congress to 'make college tuition deductible from taxes, permanently' — lead colleges in turn to raise their tuition?

College officials seemed genuinely perplexed by the committee's plan, which some saw as laying the groundwork for Republican objections to that and other proposals Democrats have vowed to pursue when they have the ability to set the agenda in the 110th Congress. 'Reading the tea leaves, this seems to be a way of developing arguments for when [the Republicans are] in the minority,' said one college lobbyist, who asked not to be identified. Another person briefed on the committee's plans noted, though, that the panel's Republican leader, Sen. Charles Grassley of Iowa, is not seen as an especially partisan lawmaker, and that he has worked closely and collaboratively with his Democratic counterpart (and the committee's soon—to—be chairman), Sen. Max Baucus of Montana.

The Finance Committee spokeswoman said little else was known (or could be said) about the hearing at this point, and that no witness list had yet been developed. But some scholars, including Bridget Terry Long, a Harvard University economist, and Richard K. Vedder, the Ohio University economist who sat on the Secretary of Education's Commission on the Future of Higher Education, both have argued that the existing federal tax credits may encourage institutions to push their tuitions higher.

Hat tip: NRO's Phi Beta Cons blog

Jack Kemp   11 20 06