Michigan legislature split on how to handle college tuition

By RAY WILBUR

Capital News Service

LANSING — Michigan officials are weighing their options for solutions to a university funding crisis that saddles the state’s students with the ninth-highest average debt in the country.

That’s how the Michigan League for Public Policy recently ranked the state in a report that shows state support of universities dropping 30 percent since 2003.

The revelations are not surprising. In 2011 Gov. Rick Snyder cut higher education funding by 15 percent, the league said. That came after years of smaller cuts caused by the nationwide recession.

The state’s budget was in complete imbalance when Snyder took over, said Sen. Darwin Booher, R-Evart, who chairs the Senate Banking and Financial Institutions Committee.

“The money had to come from somewhere,” Booher said. “We had to find almost $3 billion that wasn’t there.”

Higher education funding has increased incrementally since then and has almost returned to its 2010 level of around $1.7 billion. But the Legislature is split down the aisle on how to handle rising student debt caused by increased tuition and decreased state funding.

Republicans in the House and Senate stick to tuition restraints. That means they penalize universities that raise tuition above certain caps. Those universities can lose  supplements to their base pay. Democrats seek new funding and ways of protecting students from debt.

While Republicans see increasing public funding for universities as a priority, they say it is vital for universities to cut wages and building projects to keep tuition low.

“A portion of funding is now allocated based on how well universities control their costs and is contingent on universities limiting their tuition increases,” said Sen. Tonya Schuitmaker, R-Lawton, chair of the Senate Appropriations Subcommittee on Higher Education.

But many lawmakers and advocates say higher education should be a higher priority for state funding.

“If a college raises tuition higher than the restraint, they don’t get all the funding,” said Peter Ruark, a senior policy analyst with the  League for Public Policy. “We want them to go further and restore a lot of that cut money and actually make receiving the extra money contingent on reducing tuition, but this would need a significant amount of additional funding.”

Ruark pointed to the 2011 business tax cuts amounting to $1.7 billion. He said those tax cuts could have been used to fund Michigan universities.

“The state of Michigan basically has forgone almost $2 billion a year in order to provide a tax cut,” he said. “Some of that money could have been used to fund our universities.”

Schuitmaker said that as the economy has recovered, more state funding is available, but there is competition for it.

More funding for universities isn’t the only issue. Some lawmakers have introduced bills to help protect students from the student debt they incur.

Democratic Sens. David Knezek of Dearborn Heights, Coleman Young of Detroit and Rebekah Warren of Ann Arbor last spring introduced bills to protect students from predatory lending.

It would create a Student Loan Bill of Rights with guidelines for fair lending. It also would require lenders to be licensed and follow rules to protect students from being manipulated while they pay back their student debt.

“If a student needs to apply for a loan above and beyond any financial aid they receive, we want to make sure they aren’t being taken advantage of,” Knezek said.

It also ensures lenders that make federally guaranteed loans that they will be reimbursed for good faith lending.

Other proposed legislation would give graduates of Michigan universities who stay in the state tax credits while they repay loans. Sponsors don’t expect any of these bills to be taken up by the Legislature.

They all cost money, said Dan Hurley, CEO of the Michigan Association of State Universities. Spending pressures from programs such as Medicaid, corrections and K-12 education compounded by a strong hesitancy to generate new revenues that get in the way, he said.

Some lawmakers don’t understand higher education spending trends, he said.

“We’ve seen five years of reinvestment but we’re still down from where we were 10 years ago,” Hurley said. “But some members, this is their final term and for all but one, they’ve increased funding.”

The current legislative session most likely won’t pass any higher education bills, for now leaving students and universities waiting to see how this issue is addressed.