When the student aid supporters say two parallel bureaucracies would be wasteful, the tax credit backers answer that leaving the job to one bureaucracy is worse--considering that bureaucracy is the Department of Health, Education and Welfare (HEW). Roth's aides cite the Guaranteed Student Loan Program as an example of a bureaucracy at its worse. Calling the program "the worst administered program in the government," one aide says that one in every six loans granted under the program now stands in default, and 316 people who have defaulted on their loans work within HEW itself. The aide also says that the IRS would be able to apply the clout of a taxevasion charge against people who abuse the tax credit program.
On the question of who benefits from the different programs, supporters of the student aid bill say their package gives more support to middle income families than the tax credit and does not give aid to families who probably do not need it. Any family, regardless of income, would be eligible for the tax credit if the family had any tuition costs to pay after receiving any federal, state or institutional scholarships. A Congressional Budget Office study released in January shows that while almost half of the money for the tax credit would go to families in the $10,000 to $25,000 income range, as much as 37 per cent would go to those earning over that amount and only 13 per cent to families earning less. Opponents of the tax credit say more good can be done by giving bigger grants to a smaller group of people than by giving a maximum of $250--which hardly makes a dent in most term bills these days--to almost everyone with a child in college.
Some observers fear that the benefits of a tax credit will be nullified if schools choose to raise their tuition because of the tax credit. Financial aid officers may take the extra $250 into consideration when making aid awards. If this were to happen, only students who did not receive financial aid would get the full benefit of the tax credit.
Roth's aide said Roth has recently added a provision to the bill to prohibit financial aid officers from reducing awards because of the tax credit. He added that $250 was not enough to tempt schools to raise their tuition.
Although the student aid bill includes extra funds for lower income families, opponents of the bill say programs for lower-income students may eventually be hurt by increasing funding for middle income students. If the budget were to need tightening somewhere in the future, Congress would be more likely to authorize and across-the-board cut in funding for these programs rather than graduating the cuts according to income. Also, the open eligibility for loan subsidies would put low income students into competition with a larger group of people for the same money, and may make borrowing harder for those who need it most.
Harvard, of course, has an interest in which bill passes and is lending its voice, along with those of other expensive schools, to support the student aid bill. Gibson says the increased funding for the SEOG program and the Guaranteed Student Loans are particularly helpful for students in such schools. The BEOG has a maximum grant and is not affected by the cost of the school the student attends, but the SEOG money goes directly to the schools to allocate as part of their financial aid program and is therefore sensitive to the costs of each school. Most students in higher-cost schools borrow money so they are more apt to take advantage of the open eligibility for the loan program.
Roth's aide also says that higher-cost schools like Harvard that depend heavily on their endowments are also concerned that legislators may decide to tighten up tax laws concerning deductions for charitable contributions if a tax credit bill is passed, thereby discouraging gifts to universities.
The two sides in the race are jockeying for position in preparation for the final decision, which must come soon if these programs are to be implemented on schedule. The tax credits would start on August 1, 1978 and much of the increased funding of the student aid bill would be available for the start of the next academic year with the following in the next year.
The tax credit, in this form or a similar one, has passed the Senate three times, but has never come to a vote on the House floor. The Senate Committee on Finance recently passed this version of tax credit as an amendment to the wool tariff bill, and it awaits scheduling for the Senate floor. The student aid bill has been reported out of the Human Resources Committee, and as soon as the debate on the Panama Canal treaty is finished--maybe in a week or two--the student aid bill will race the tax credit to the Senate, with each side hoping to gain the advantage of getting the first vote.
The House leadership has been notoriously unreceptive to the idea of tax credits. Growing support in the House may force the power-wielders to permit a vote on the issue although some Congressional aides say the House would prefer to deal with the tax credit as part of a big, upcoming tax bill rather than as an unrelated rider to the wool tariff bill. The student aid package passed out of the House Committee on Education and Labor last week, and an aide for the committee said she expects a vote in the House next week.
Gibson says he is worried that, unless Congressmen hear strong support from their constituents for the student-aid bill, they will pass the tax credit, which appears to be a simple way of allocating the money, rather than take the time to understand the more complicated impact of the student aid bill.
Some aides mention the possibility that Congress might not be able to decide between the two packages, and may avoid the difficult choice by passing both bills and letting Carter decide which to implement. Carter has said before that he would veto the tax credit, but much would depend on the decisiveness of support for each bill in Congress. Whichever bill passes, it will mean more money--maybe a lot more--for a substantial number of Harvard students.