With its untenable, sky-high costs for students, and innovators offering alternatives in the marketplace, our present higher-education system is on the verge of imploding. Instead of propping up a failing system as President Obama proposes — by conditioning the amount of federal campus-based aid to colleges on tamping down tutition — Congress can aid Americans in saving for college and improving their debt burden, the Heritage Foundation’s Stuart Butler explains.
One way would be
to remove the double taxation of all savings, including savings for college. Another is to give “human capital” investments in college education similar tax benefits to investments in physical capital. Heritage’s Saving the American Dream plan does that. It would end the taxation of savings and it would allow all families to take a tax deduction for higher education costs, capped at the equivalent cost of four years in a state college.
Such measures would provide incentive to families to save for college, rather than assuming more debt. In addition, in moving away from offering campus-based aid, the federal government would also be enabling the higher-education revolution to advance.