How Biden’s tax plan could end up raising college tuition

By Harry Wilmerding

President Joe Biden’s fiscal year 2023 budget includes provisions that would expand federal subsidies to university students, a move that may encourage colleges to hike tuition fees, experts told the Daily Caller News Foundation.

Biden’s budget proposes expanding the size of a Pell Grant, a federal subsidy awarded to students predominantly from lower-income families who may need assistance paying for college, by $2,175 in the 2023-2024 school year and doubling it by 2029. The plan could drive tuition prices even higher, experts told the DCNF, as universities would be incentivized to raise tuition costs.

“Every time we increase Pell Grants, the universities increase their tuition,” Stephen Moore, former economic advisor to President Donald Trump, told the DCNF.

Roughly one-third of all undergraduate students received a Pell Grant in the 2019-2020 school year, according to data from the National Center for Education Statistics.

“We spent hundreds and hundreds of billions of dollars subsidizing universities, and they are more expensive today than ever before,” Moore told the DCNF. “The biggest outrage in America right now is the amount of money these universities are charging families.”

“We should be using federal grant money to force these states to lower tuitions,” Moore added.

The reason colleges are so expensive right now is that the government has subsidized them so heavily, allowing them to increase their tuition, Isabelle Morales, a policy communications specialist with American Tax Reform, told the DCNF.

“The federal government is able to get away with this because they pay such a huge share of the cost, and there is no incentive for colleges to decrease the price of tuition,” Moore told the DCNF. “If you were to cut out all subsidies and loans to universities, they would have to reduce their tuition significantly because no one would be able to afford to pay it.”

Instead of the federal government encouraging universities to increase tuitions through federal subsidies, Republican Florida Rep. Byron Donalds told the DCNF that students should be incentivized to pursue degrees that produce successful careers.

“We have a serious problem where the federal government has essentially primed the pump for colleges and universities to continue to raise tuition rates on students,” Donalds said. “What we should be doing is thinking about creative ways where we fund economically viable degree tracks and where we don’t provide as much funding to those degrees that are not as economically viable.”

“To give an 18-year-old the same amount of money to study art history, as well as engineering, simply doesn’t make sense,” Donalds added. “We all know an engineering degree has so much more financial viability in the future than an art history degree.”

While Biden’s budget makes no mention of student debt relief, top Democrats including Senate Majority Leader Chuck Schumer have urged him to forgive as much as $50,000 in student loans.

“This is just bad policy, as they are trying to achieve their goal of forgiving student loan debt,” Donalds told the DCNF.

“The bigger problem is we continue to subsidize higher education regardless of the efficacy of higher education for too many Americans,” Donalds added. “It’s only going to make the problem worse down the line.”

Morales sees this proposal as a “carveout for education,” adding that student loan forgiveness is a direct giveaway to wealthy elites. She pointed to a Brookings Institution report highlighting that rich, white elites would benefit the most from student loan forgiveness.

The only way to fix the growing tuition problem would be to end government subsidies toward universities, Moore told the DCNF.

“We have to stop having the federal government continue to subsidize these universities,” Moore told the DCNF. “Why do they subsidize these universities? Because the universities are left, and they are part of the left-wing establishment.”

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Image courtesy of The White House
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