Lawmakers eye reform as college costs soar

By Kevin Drawbaugh

WASHINGTON (Reuters) - The college tuition inflation express picked up more speed this year, said a report released on Monday, while Congress tries to find the brakes.

In-state tuition for the 2007-2008 school year at public four-year colleges was up 6.6 percent, a faster increase than last year, said the College Board's annual survey of higher-education expenses.

Average total in-state charges -- including tuition, room and board and other costs -- for public colleges rose to $13,589 a year; at private colleges, they rose to $32,307, said the board, a non-profit research group that also administers standardized tests for college-bound students.

"This report shows that college tuition is still on the rise, increasing at an even higher rate this year than the year before," said Rep. George Miller, chairman of the House of Representatives Education and Labor Committee.

"This college cost crisis stands to hurt not just students and families, but also our nation's competitive edge in a global economy," the California Democrat said.

Miller said he plans to move legislation before year-end to crack down on marketing by student loan firms and "to develop strategies to help rein in increases in college tuition."

Last month, President George W. Bush signed into law a bill steered through the House by Miller that slashed federal subsidies to student lenders and raised student grant funding.

Profits of Sallie Mae, Citigroup Inc, Bank of America Corp, JPMorgan Chase & Co and many other lenders are expected to be hit by the subsidy cuts.

Loans, grants and tax benefits play a crucial role in bridging the ever-widening gap between the financial resources of most students and rising college costs.

The College Board said in its report that average full-time students at four-year public schools get $3,600 in grants and tax benefits; at four-year private schools, $9,300.

"Though higher than the previous year, total federal grant funding to undergraduates was still lower in 2006-07 than it was three years earlier, after adjusting for inflation," the board said. The most recent grant data is from 2006-2007.

Amid widespread concern among middle-class voters about college costs, all three of the front-running Democratic presidential candidates have promised college aid reform.

Hillary Clinton, Barack Obama and John Edwards all have said they would kill the federally guaranteed student loan program at the heart of the $85-billion student loan industry.

Robert Shireman, head of the Project on Student Debt, an advocacy group, said of the latest College Board report: "Tuition is up, again, with no sign of relief in sight.

"College officials tell us not to worry because there's plenty of financial aid. But that aid is clearly not going where it's needed, because student debt is up by an even greater margin than tuition ... by our accounting."