Giving College Parents a Voice

The nation’s capital is filled with advocacy groups, but Jim Boyle thinks one more needs to join the short list of organizations that have become household names like AARP.

Boyle’s group is called the College Parents of America. Its mission, he says, is to cure inequities that force middle-class families to shoulder ever-increasing costs for college educations.

“What does it say when there is a $100,000 deduction for small-business people to buy an SUV, but there’s only a $4,000 deduction to finance higher education?” said Boyle, referring to a law that allows entrepreneurs to write off up to $100,000 for new business equipment, including sport utility vehicles in some cases.

“The intention of our group is to fill a vacuum,” he said.

The problem that parents with children in college have historically faced is that their economic future is largely dependent on legislative action, and yet no one represents their interests in Congress, Boyle said. There are groups representing colleges, financial aid officers and students. But the parents footing the college bills have been largely on their own.

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Legislative Focus

This year will be especially important, he said, as Congress subjects the Higher Education Act to review, which happens every five years. The act governs such issues as teacher training and student aid. Proposed changes could have a dramatic effect on parents who send their kids to college over the next decade.

Among the possibilities:

* Federal student loan limits that have remained constant for more than a decade may be hiked, creating a mixed bag for students who could get access to more cash but also graduate with more debt.

* The formula for expected family contributions -- a pivotal calculation in determining a student’s eligibility for financial aid -- is up for grabs, largely because the formula is now filled with glitches created by new types of college savings plans. Currently, for example, money held in the student’s name weighs more heavily in the aid formula than money saved for the child by a parent, grandparent or other relative or friend. That may change.

* Institutional aid formulas, which determine how much federal aid money goes to individual schools, may be scrapped, said Alexa Marrero, spokeswoman for the House Education and Workforce Committee. Congressional leaders believe the current formula may not be delivering enough aid to the neediest students.

* A heated debate has started over the debt of students who have graduated. Some graduates want to be able to refinance their student loans in the same way homeowners can refinance mortgages. But some legislators say government subsidies for student loans should be dedicated to those still in school, not to graduates aiming to play an interest rate game.

College Parents of America was formed in 1998, but Boyle said it had been dormant for most of its existence. With the Higher Education Act coming up for review, the 47-year-old former congressional staffer is working to revive the group, which charges an annual membership fee of $36.50. The group has about 1,000 members, he said.

Boyle said part of his time as the organization’s president was devoted to meeting with members of Congress to discuss the effect of their decisions on parents of college students. His group has joined the Coalition for Better Student Loans to fight for higher loan limits and lower fees.

“I can’t claim that we have the political clout to make this stuff happen,” Boyle said. “But politicians instinctively get it. They know that there are vast numbers of current and future college parents and there’s a great deal of sensitivity to college costs. We need to make our voices heard.”

Boyle’s top goal is to get the issue of tax breaks for college bills on the congressional radar.

There are three tax breaks for parents of college students, he noted. However, the one that’s available to most -- a $3,000 deduction -- is a temporary break that’s slated to expire in a few years. Boyle wants to make it bigger, permanent and available to parents earning considerably more money. It’s now available only to single filers earning less than $65,000 and to married couples with less than $130,000 in joint income.

He thinks parents earning up to $180,000 on joint returns should be allowed to claim the deduction and that its maximum amount should rise to $10,700 -- the average cost of a year at a public university.

“There is a recognition that the investment in higher education should be better rewarded by the Tax Code,” Boyle said.

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Flawed Formulas

Still, it is the potential revamp of the financial aid formulas that may have the most sweeping effect on many parents of college students, noted Jack Joyce, director of guidance services at the College Board, a New York-based college testing and information organization.

The formula determines which students are most needy and thus qualified for the greatest amount of aid.

But eligibility glitches are rife, partly because the calculation puts more weight on students’ assets than those of their parents, and new types of college savings accounts make the determination more difficult.

To illustrate, consider $10,000 in savings meant for a student.

If the money is in a 529 prepaid tuition plan -- a tax-favored program (known by the U.S. Tax Code section authorizing it) that pre-purchases college tuition units at a university or group of universities -- it’s considered the student’s asset. Each dollar in the plan reduces the student’s eligibility for financial aid by about 35 cents. The result is the same if the $10,000 is in a Coverdell Education Savings Account or a Uniform Gift to Minors Act account.

If the money is in a 529 college savings plan, a slightly different option that allows participants to save on a tax-deferred basis and use the accrued nest egg to pay for any college, the effect on aid eligibility would depend on who opened the account.

If the account was opened by the parents, the student’s aid eligibility would drop by about a nickel for every dollar in the account. But if the account was opened by an aunt or a grandparent, the student’s aid eligibility would not be affected. It would be as if the $10,000 in savings didn’t exist.

“This disparity is troubling to some people in the aid community,” said Kalman A. Chany, a New York-based financial aid counselor and author of “Paying for College Without Going Broke.”

The last time financial aid formulas were reviewed, some lawmakers wanted to fix this glitch by simply creating a category of “family assets,” which would all get the same weight in the aid formula. But the debate over how to do this grew so heated that lawmakers shelved the issue. Joyce predicts it will emerge again.

Boyle is also hoping for a substantial increase in student borrowing limits. The freshman borrowing limit hasn’t been adjusted for inflation since 1986, when the average cost of college was a fraction of what it is now, he said.

It’s still early to say just how financial aid may change this time. Most of the proposals are still being written and are unlikely to land before late spring, congressional staffers say.

In the meantime, Boyle urges parents to get involved by learning about what’s being proposed and how the issues might affect prospective students.