Higher Education Tax Credits and Deductions

February, 2013

Washington -- Several new think-tank papers on higher education finance, funded by the Gates Foundation, suggest that existing tax credits and deductions to help students and families pay for college should be changed or eliminated entirely. I agree, if done as part of a comprehensive overhaul of higher education finance.

It's not so long ago that these "tax expenditures" were established. Many people still working in higher education were present at their creation; I was one and here is my recollection.

When President Clinton and Senator Dole contested the 1996 presidential election, Dole advocated across-the-board tax cuts for all; Clinton favored smaller "targeted tax cuts" that would spur certain segments of the economy and would not increase the federal deficit as much as Dole's proposals. Among Clinton's favorite examples were targeted tax cuts aimed at higher education.

After Clinton won the election, many of us at the U.S. Department of Education thought we would hear no more of these targeted tax cuts; we figured they were a part of election year rhetoric. We were taken aback when Clinton proposed his "Hope Scholarships", which were not scholarships at all, but tax credits. The idea was worked up after the election by the White House and the Treasury Department without much if any input from the Education Department. Lawrence Summers gave the Administration's pitch to Capitol Hill.

I was skeptical on many grounds but saw one possible advantage for tax expenditures. Funds would not be handled by colleges but go directly as benefits to students and families. I had just written and published an article in Publius, The Journal of Federalism, showing how colleges captured certain kinds of financial aid for themselves, rather than benefiting students and families as intended.

The Clinton initiatives were soon passed into law. The cost to the federal treasury was not so great as to preclude adoption of the first balanced federal budget in decades. I and a few of my colleagues from the Department of Education got invitations to the White House to mark the signing of the Balanced Budget Act of 1997.

The very first year the Hope Scholarships were in effect, one college (Bowdoin) proudly announced a plan to treat this new program just as it had other student aid programs: students and families were now better able to pay higher net tuition in their financial aid packages. Bowdoin justified its action by saying it would use the proceeds to help the truly needy.

This created a dust-up in Washington. The Bowdoin president quickly said his financial aid officer had spoken out of turn; Bowdoin had no such plan. I proposed (and drafted) a letter from Secretary of Education Riley to all college presidents asking them not to defeat the purpose of the tax expenditures by manipulating financial need calculations in the packaging process.

The letter was sent to all presidents. It had little effect; the enrollment management industry already was marketing to colleges ways they could determine, or estimate, how much families were benefiting from the new tax expenditure programs and how to take advantage of them.

In 2010, Nicholas Turner studied the effect of such tax expenditures and concluded that they were essentially offset "dollar for dollar" by net tuition increases in the aid packaging process. (Ironically, Turner now works at the Treasury Department.)

The higher education tax credits of the 1990s, now in revised iterations, should be ended in favor of federal deficit reduction and appropriated programs that help states and colleges work toward common goals with (not against) federal efforts. None of the savings should be directed toward programs that can and will be exploited in financial aid packaging.

The Nebraska Hall of Fame, Part I: Frederic E. Clements

February, 2013

Lincoln -- The Nebraska Hall of Fame Commission selects one person every five years for inclusion into the Hall of Fame. The person must have been dead at least thirty-five years before selection, to ensure a test of time.

Last year I nominated Frederic E. Clements and his wife Edith Schwartz Clements, both NU graduates, botanists, and founders of the science of ecology. They were a team of scientists the likes of which, according to the Nebraska Press Association, had not been seen since the Curies. It was foretold that they could not be chosen, because the state governing statute permits only one selectee at a time. The Commission chose Alvin Johnson, a deserving addition whom I also supported.

The Commission has discussed the need for a statutory change. I was gratified that it recognized the importance of the Clementses and may recommend statutory changes to give the Commission more flexibility. The following is the short version of my presentation to the Commission on behalf of Frederic Clements.


Where to start to describe perhaps the greatest scientist ever produced by the State of Nebraska, Frederic Clements? He was a whirlwind student at the University of Nebraska: Phi Beta Kappa, Sigma Xi, varsity football, co-founder of the Pershing Rifles, poet, botanical surveyor of the Missouri and Niobrara valleys, and president of the Seminarium Botanicum (Sem Bot), which elevated academic standards at the fledgling university and put it on the map as one of the nation's leading universities of its day.

After writing, with his co-author Roscoe Pound, one of the world's first phytogeographical surveys (for which both authors received a Ph.D.) he joined the University of Nebraska faculty in 1899. By 1905 he had written a body of scientific work, including Research Methods in Ecology, that established him as founder of the modern science of plant ecology. With his approach to "dynamic ecology" he became known nationally to Gifford Pinchot at the U.S. Forest Service and soon became chair of the department of botany at the University of Minnesota. There his publications marked him as one of the world's leading scientists in his field and he moved in 1917 to the Carnegie Institution, which placed him in charge of its laboratories in Tucson and Santa Barbara, in addition to supporting his own laboratory (established with his wife Edith) at Pikes Peak.

Frederic aggressively advanced his ecological theories, which over time have become known as the "Clementsian paradigm." He viewed vegetation as an ordered community that was more than the sum of its individual plants, and traced the succession of plant communities in any given location toward an inevitable climax and stable state. He viewed environmental factors as determinative of climax states and also conducted experiments to show that environmental factors were heritable.

These views eventually were challenged by others in the academic community who favored a more individualistic and chaotic view of nature and who insisted that Clements step back from his claims that environmental factors were heritable. The Clementsian paradigm began to fall from academic favor and after Frederic's death in 1945 survived mainly through the network of followers that Frederic had, during the Dust Bowl years, built up in the Forest Service, the Soil Conservation Service, and among practitioners in the field of range management.

The Clementsian paradigm, however, became a model in other disciplines that borrowed its holistic approach. Moreover, the inventiveness and pioneering work of Frederic Clements in botany and ecology made him an important figure in the history of science. In recent decades, many articles and books have rediscovered Frederic and Edith Clements; more are inevitable as the new field of epigenetics demonstrates that environmental factors are indeed heritable. Not long ago I had a note from a Canadian scholar who wrote, "the Clementses will be having something of a comeback - along with the Tansleys." Sir Arthur Tansley, once a rival of Clements for recognition as the world's leading ecologist, wrote of Frederic Clements that he was "by far the greatest individual creator of the modern science of vegetation."

Nebraska's Anti-Conservation Tradition

February, 2013

Lincoln -- The Lincoln JournalStar has ridiculed a "silly" bill in the Nebraska legislature for its anti-environment and anti-conservation hyperbole. The editorial suggests the bill is out of the mainstream, which favors conservation and is beyond conspiracy theories.

If only that were true. The bill's anti-conservation sentiment goes back decades in Nebraska; it is alive and well in the best educational circles as well as on the political fringes. Conservation advocates face a constant struggle.

Eugene Glock, a farmer and one of the founders of Nebraska's Natural Resource Districts, explores one aspect of the sentiment in his article "The Resource Cliff", in which he warns of the loss of soil and water resources if educational institutions do not do a better job of conservation research and education:

[S]oil and water conservation practices and structures can be applied very quickly if the farmer sees the wisdom of using those practices. Our colleges and universities need to put emphasis on research and innovation to produce conservation methods that are compatible with our larger machinery. Research is also needed to determine why producers, who know about the necessary conservation methods, choose to ignore them.

Chris Helzer writes provocatively of how far Nebraska has fallen in conservation education:

A couple years ago, we brought ... Illinois botanists to Nebraska to help us with a research project. We had to, because there aren’t many people in Nebraska who can identify the majority of plants in a prairie. That’s embarrassing. More importantly, how can we manage prairies or evaluate our conservation progress if we can’t identify the species we’re trying to conserve??

This is an affront to the once-proud Nebraska legacy of professors Bessey, Clements, and Weaver, recognized world-wide as the greatest botanists and ecologists of their day, or perhaps any day. (And an affront to some formidable contemporary Nebraska botanists, who are doing their best despite a lack educational emphasis and resources.)

The anti-conservation views of historian James Malin still hold sway over many Nebraskans, educators as well as citizens. Malin despised what he called the evangelical conservationists, suggesting they were totalitarians who would destroy the country. He attacked native Nebraskan Frederic Clements in particular, perhaps because Clements was so successful. Clements's students and protégés fought the Dust Bowl with conservation measures and a pro-conservation message.

But Malin's conservation-as-totalitarianism message was published by, and is still available at, the University of Nebraska Press. Clements has almost been forgotten; his ashes are buried in Lincoln's Wyuka Cemetery, unmarked. None of Professor Clements's Nebraska publications is available on the UNL digital commons, even his ground-breaking Research Methods in Ecology.

Perhaps that is too harsh. Malin was in many respects a fine historian (at the University of Kansas) and his paranoia about totalitarianism has been given the comeuppance it deserves by Bancroft-award professor Donald Worster (also of Kansas). Nor was Clements the perfect scientist. Nevertheless, the comparison serves to point out that anti-conservationism has a long history and much of it is alive and well in mainstream Nebraska.

To any researcher, writer, or graduate student looking for a worthy conservation topic: I have a large collection of documents on Frederic Clements and his remarkable wife, Edith Schwartz Clements, who was the first woman to receive a Ph.D at the University of Nebraska. I'd welcome the chance to share them.

Lifting a Taboo about Paying for College

February, 2013

Washington -- Richard Kahlenberg has a fine commentary over at the Chronicle of Higher Education about how students are slowly lifting the taboo of discussing what they pay for college.

Part of the reason for the taboo is that colleges themselves do not want their students to know who pays what. Many colleges do not allow students and their families to see how net price is determined behind the curtains of their student financial aid offices. It is deemed proprietary information.

But another reason is that the U.S. Department of Education does not enforce the Student Right to Know Act. This law requires colleges that participate in federal student aid programs to divulge the methods by which financial aid is distributed and the criteria for determining the amount of a student's awards. It applies to all aid, not just federal aid.

If this law were enforced, many bad practices in college financial aid offices would come to an end, as they could not stand up under public scrutiny. The overall effect of enforcing the law would be good for colleges. Many now are trapped in practices that they cannot change by themselves for fear of unilaterally disarming against other colleges.

About fifteen years ago, when I was working in the Department of Education's Office of Legislation, I had a call from George Conant of the House Republican staff. He was working on re-authorization of the Higher Education Act and wanted new and stronger provisions in the law to provide more transparency in the setting of net price and the awarding of financial aid. He and I went through the existing law and regulations and determined that transparency was already required; making it a reality was a matter of enforcement. He drafted instead some language requiring the Department to do a study of how federal aid was packaged (which the Department never did).

There is currently a lot of talk from the President on down about the need for transparency. There is considerable bipartisan agreement on the need for more of it. A good start would be for the Department of Education to enforce what is already on the books.

Faculty I Envy

February, 2013

Washington -- It's nice to know one's place and occasionally be put into it. That's the treatment I get from Professor Luciano Penay of American University. Mr. Penay, a retired professor of art, knows I am good for hauling around paintings, prints, and installations in my ten year old van; he knows I am good at following instructions when doing a hang; he knows I am good with a hammer and picture hooks; and at cleaning up.

Mr. Penay is a curator and master of the hang. No one can juxtapose art works, to get the most from them, better than he. But he also has good (and occasionally great) art to work with: the creations of many of his own students. And lest you think these "students" are youngsters, many of them go back decades with him.

Which is why I admire and envy him. What faculty can say they still have a following, over decades, that meets as often as weekly? The followers are known as Group 93.

I am not an artist, just someone who helps, observes, and admires. And who smiles inwardly when some of the students and my fellow helpers (who may in other lives be foreign service officers, diplomats, engineers, or who knows what) are put in their place by Mr. Penay in the process of hanging or taking down a show.

One student is shown deference above the others. She paid for the building in which the group meets, the Katzen Arts Center, a magnificent gallery and museum on Ward Circle. It stretches along Massachusetts Avenue longer than the Kennedy Center stretches along the Potomac. It is a treasure in a city of great galleries such as the Corcoran, the Phillips, and the National Gallery of Art. Myrtle Katzen is a member of Group 93. Her love of painting inspired the building.

Myrtle wears the deference lightly. She welcomes criticism of her works from Mr. Penay and the other Group 93 artists. In group shows, her works are interspersed with others. Sometimes they sell, sometimes not. Collectors at the last Group 93 show, buying works for their quality as much as their name, selected from (among others) Michael Graham, Joan Birnbaum, Claudia Vess, Lucy Blankstein, ...and Myrtle Katzen.

The Washington Post in the past year has finally discovered great art locally, and great stories that go with it. Good for them. The Group 93 story is yet untold, but overdue. And it's not just a local story: this building, this professor, this benefactor, and this group link the local to the global. Some Group 93 artists also show internationally.

When not hanging, Luciano Penay and I have some good conversations about Lincoln, Nebraska. He came from Chile (where he still spends part of each year) to study in Lincoln in the late 1940s. Luciano lived in the YMCA at 14th and P Streets and washed dishes at a Greek cafe to earn tuition money. He loved the autumn weather, until it turned to winter. Then he sought less extreme climes. At AU he is in his element.

Firing in Defense of the Public Trust

February, 2013

Lincoln -- Governor Heineman has summarily fired his hand-picked lieutenant governor for violating the public trust. The extent to which the public trust was violated is not exactly clear. It purportedly was related to some late night phone calls to four women on a state provided cell phone, but likely it had as much to do with the fact that one of the women was involved in fronting for a scheme that could cause embarrassment to the governor and to powerful agriculture interest groups.

Whatever the reason, there are still old hands at the state capitol who, in advising the governor how to handle the matter, would ask themselves, "What Would Jim Exon Do?" if he were still governor. Leaving aside the notion that Jim Exon would ever have tolerated or exploited such a scheme in the first place, the firing event nonetheless provides an opportunity to look at Jim Exon's view of the public trust. The following comes from anecdotes I shared with Chuck Pallesen a few years ago as he was preparing his book Big Jim Exon.

In late 1978, Dick Herman of the Lincoln Journal called me at home one evening to get background for an editorial on the accomplishments of the Exon Administration's two terms in office. I listed a few, about which he was dismissive. Then I said something that shocked him: "Governor Exon ran a clean, honest government for eight years. That's a tremendous accomplishment." Dick downplayed it: "Come on, this is Nebraska, not New Jersey." I pursued, saying that the reason for it was that Jim Exon would fire his best friend if he was caught doing anything untoward, and I mentioned that an old friend and supporter at the Labor Department with whom he had been duck-hunting one weekend was out the door the next Monday when it came to light that he was caught up in trouble. The word was always afoot in state government that if you were doing anything on the shady side, Governor Exon would show no mercy.

But he would defend state employees who may have erred on the side of trying to do their jobs too well and in the process said something impolitic or potentially harmful to Governor Exon's own efforts. Don Leuenberger once said in a press conference that he had used "sleight of hand" in handling a Welfare Department matter. Jim Exon defended Don as having made a slip of the tongue. I once said a few words before the legislature's Appropriations Committee that were too pointed for the Omaha World Herald's editorial writers. Jim Exon fired back with a full op-ed in the next Sunday edition defending me.

When I was DAS director at the end of the second Exon term, one of my employees was caught using a state copy machine to run off football pool sheets. I determined that this was not incidental use, but a pattern of behavior that could be described as running a bookie business out of the state capitol. I fired the employee, who sued for reinstatement. I had to give a deposition on Christmas Day, 1978, and answer questions as to whether my actions were at the instruction of Governor Exon, who, the employee's counsel alleged, simply wanted to appear tough in that year's election campaign. Under oath I said no, I had received no such instruction and there was nothing political about it; high standards were the norm year in and year out. The dismissal stood.

Academic Degrees

February, 2013

Berlin -- In Berlin for a few days I'll be asking citizens what they think of a second member of the Merkel cabinet having an academic degree withdrawn by a German university on account of plagiarism. First it was the defense minister; now it is the education minister, of all people.

Germans take their academic degrees seriously. The correct way to address a professor with a doctorate is "Professor Doktor" so and so. If he or she has two doctorates, then it is "Professor Doktor Doktor" so and so. The withdrawal of doctoral degrees from two ministers might otherwise cause the government to fall were it not for Frau Doktor Merkel's (so far) steady hand on the wheel of the Euro crisis.

Americans are less title conscious, even though a customary American doctorate and its German equivalent represent roughly the same academic accomplishment. Nevertheless, some academics in each country hold the other's degree under suspicion. Improper reference in Germany is frowned upon, to say the least. Properly referred to, they are not interchangable; when adding initials to a name, the former is Ph.D and the latter is Dr. Phil.

I've often wondered about Louise Pound's degree. The great Nebraska English professor and folklorist (and remarkable athlete) is always referred to in Nebraska as Louise Pound, Ph.D. But because her degree was awarded at the University of Heidelberg, I suspect it is really Dr. Phil. (As a woman she was not admitted to the doctoral program of the 19th century University of Nebraska, and therefore went to Germany for her doctoral studies.) I've asked both of her biographers but neither has seen her actual degree. From her own descriptions of the degree process, it seems to me it is a Dr. Phil. I am a Dr. Phil., not a Ph.D., and never confuse the two, lest someone think it is an offense against academe in one country or the other.

As to plagiarism, it is a serious offense and I am glad to see the German ministers' degrees withdrawn if the evidence warrants (unlike the case in Wendy Wasserstein's play "Third", where an English professor accuses plagiarism from a student she takes for a Republican, as surely he is unable to write coherently). My mother was a teacher and later in life took a job in administration at the Lincoln (Nebraska) Public Schools. She was a fine writer and typist, and often was imposed upon to write dissertations for fellow employees who were getting doctorates (Ed.D's) at the University of Nebraska. They would give her long texts by other authors to weave into their works, unattributed. I advised her not to do it; it was cheating. She said they all did it. I don't know if any of these plagiarists are still in responsible positions in education, or even alive, but if so I hope the news of the German education minister's problems reaches them and that they have some sleepless nights over it.

Why I Favor Pell Grant Reform

February, 2013

Washington -- Recent news out of the Congressional Budget Office suggests the Pell Grant program is not approaching a funding crisis after all; it is running a surplus.

Well, good. But that does not mean the program shouldn't be reformed.

I hope I still have some street cred on Pell grants, having favored the creation of such a program in the days of the Carnegie Commission forty-plus years ago, having worked in the Senate to prevent the Reagan-era cuts, and having advocated for the program from positions both within the higher education establishment and the Department of Education over three decades. Always favoring grants over loans, I testified before the Senate in 2007 in favor of killing the bank-based loan program (riddled with waste and fraud) and putting the savings into grants. I filed suit against several lenders later that year; the details of the suit became public in 2009; in 2010 Congress killed the bank-based program and put billions of resulting savings into Pell grants.

But until recently CBO projected those funds to run out over the next few years, precipitating a call for reforms to cut Pell expenditures. The Gates Foundation stepped up to invite new ideas not just about Pell but about how to reform the whole federal student financial aid system. That effort is now producing thoughtful reports and promising reforms.

The Pell problem is actually much larger than simply how much the program spends. A more basic question involves its efficiency, and indeed (according to some of the new reports) whether it works at all anymore.

Here are some problems I see with the current Pell program:

• Too much goes to for-profit schools, which have a poor record of graduating their students. Cellini and Goldin documented that these schools raise their tuition as Pell grants increase, defeating the purpose of the grants. Students are loaded down with loans; their default rates are high. The billions in Pell grants that go to students at for-profit schools are an incredible waste.

• Waste -- or at least program abuse -- at non-profits and many public institutions is nearly as great a problem. Through enrollment management mechanisms, many schools move other aid funds around so as essentially to capture the Pell grants for themselves, rather than using the Pell grants as intended to reduce loan and work burdens for the low-income. The captured funds most often wind up aiding the non-needy, turning the Pell program into one that actually increases inequality of opportunity. L. Turner has estimated this abuse at about six billion dollars per year.

• The emphasis on Pell grants has hurt funding for other federal student grant programs such as SEOG and SSIG/LEAP, which historically have been less wasteful. These programs contained incentives to keep institutions and states committed to higher education access for the low-income, but their funding now is negligible (SSIG/LEAP has actually been killed off). The disinvestment of institutions and states in low-income aid has dug a hole in equality of opportunity faster than Pell grants can fill. (Last year at an Ed Sector forum I recommended "rebalancing" appropriations proportionately among the programs back toward what is was in the 1970s, when all the programs were working, in combination, comparatively well.)

• There's not much empirical, peer reviewed research that suggests the Pell program, despite the billions we spend on it, works as intended. In 2002 I tried to find evidence in Department of Education data bases that higher Pell awards meant lower loan burdens for the low-income, in vain. The nation's best higher education researchers have also been increasingly doubtful about Pell over the decades. I am a researcher who believes in evidence-based decision making.

Truth be told, however, I would still like to see the country make a larger investment in the higher education of the low-income, at least back up to the real level of the 1970s. It is a better cause than many of our foolish foreign war adventures (and I write that as a former Navy officer).

It is yet an even better cause if we coordinate our programs and incentives, take the waste out of of them, and fit them into an overall federal deficit reduction plan. Two of the Gates-funded reports have particularly caught my eye: Doyle's report for the Committee on Economic Development and the work of the higher education group at the New America Foundation. Both have ideas as to how to reform our financial aid system and provide states and institutions with incentives to become more constructively involved again. Both would help fund the effort at the federal level by killing off the higher education tax expenditures that N. Turner has shown largely do not work (even though they are politically popular).

Advocates for students and families and taxpayers must resist the temptation to say that now, because the latest CBO estimates show Pell funding not to be in trouble for a few years, there is no need for reform. Responsible college presidents and others who are appalled at how the current system wastes billions and leads to inequality of opportunity must also resist the temptation. Most college presidents know that American higher education is in a downward spiral that will take collective action to reverse; so permeated is the system with perversity that they cannot act individually at their own institutions. If there are not titanic battles within the presidential lobby groups, I will be surprised and disappointed. So should the country. The Obama Administration could also help by putting aside its craven talking points about how it is protecting Americans through Pell and the tax credit programs (many doubtless written by friends of mine). The time for reform is now.

The Senate and the Hagel Nomination

February, 2013

Washington -- Last weekend Leon Panetta told a Sunday television news program that the knives were out in the Senate for Chuck Hagel. This reminds me of the 1989 nomination of former Senator John Tower to be Secretary of Defense. The big difference is that Tower was a drinker and womanizer; Hagel's troubles seem to result from a tendency to speak frankly and tell the truth as he sees it.

In 2011 Chuck Pallesen of Lincoln, Nebraska, who was writing a book about former Nebraska Senator Jim Exon, called me to ask about Exon's years in the Senate. I wrote him back a note with some anecdotes, among them the following. Exon was a leader in the fight against Tower, his former colleague on the Senate Armed Services Committee. Tower didn't forget it, and sought revenge.

John Tower was nominated by President George H.W. Bush to be Defense Secretary. Sam Nunn decided to oppose him and enlisted Jim Exon in the effort. Together, they defeated Tower's nomination. Tower was spiteful and tried to get back at Jim Exon by calling him a drinker and suggesting that he was corruptly involved with an Omaha financial institution. NBC Nightly News, looking into the story, contacted Exon and asked him about a letter he had written to a federal regulatory agency on the financial institution's behalf. Exon told NBC that he had no recollection of the matter and that in any case the markings on the letter indicated it had been written by Jon Oberg and signed with the Senator's name by Dorithy Obbink. NBC News reached me in Berlin, over six years after I had left the Senate staff, and questioned me. I quickly dispelled the drinking allegation and asked them to read me the letter. I interpreted the letter for them, so they understood that in Senate-speak, the words actually signaled to the regulatory agency that they could do as they please and that Senator Exon was not getting involved in any way. NBC News got the point and then read me other letters that Senator Zorinsky and Congressman Cavanaugh had sent. We had a good laugh in that the other letters were so earnest and in hindsight foolish, and whoever was trying to use NBC Nightly News to discredit Jim Exon was doomed to fail. They killed the story promptly.

In 1994, Senator Exon and I recalled the affair in the Senators' dining room in the Capitol. It was the first time I had seen him since NBC's calls to me in Berlin. Jim Exon would be appalled at the manner of opposition to Chuck Hagel.