New Math For College Loans

The Senate Budget Committee last week beefed up some federal grants, especially for math, science and language students deemed important for national security. But that isn't likely to make a large difference, assuming -- and there's no certainty of this -- that it survives to enactment.

As it is, many schools are giving an edge in admissions to students who can pay full tuition. Combined with increasingly popular "merit-based" aid for top applicants and the marshaling of resources to make sure some of the poorest, "full-need" students can enroll, these institutions are seeing subtle changes in their student bodies. Academically marginal applicants who need aid are increasingly replaced by academically marginal applicants who can pay.

Other schools are "gapping" students, meaning that they give less aid than the amount they know the student really needs to attend.

"I see a lot of little signs that students and families are being pushed closer to the edge -- issues about bills getting paid on time, students asking for extensions, looking for unusual loans," said Douglas Bennett, president of Earlham College, a small liberal arts school in Indiana.

One student, Bennett recalled last week, even took out a personal ad in a newspaper looking for someone who would help with his college bills. "These are painful moments, to see people stretch that hard."

Of course, families and some economists increasingly wonder why college needs to be so expensive, and perhaps in some theoretical sense, it doesn't.

But in practice, two key attractions colleges use to compete for students are prestige and facilities. Prestige typically means faculty members who do more research and publish more. But giving professors more time for research means they teach less, and the school thus needs more of them. And few schools feel they can do without shiny new dorms, labs, gyms and dining halls.

And they're right. Kids and parents are attracted to both prestige and plant. And why not? In a classic case of the tragedy of the commons, students' immediate personal interests are best served by attending a prestigious school on a plush campus, even though such behavior in the long run may be bad for the entire system.

So what we can look forward to is a steadily more desperate struggle among families, colleges and government over who pays for higher education, with no resolution in sight.

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The Internal Revenue Service won a couple of signal enforcement victories this month, with the conviction of longtime tax resister Irwin Schiff and the sentencing of the last of the 10 defendants in the Anderson's Ark & Associates case.

Schiff, who has fought the IRS in court for years, arguing that there is no legal obligation to pay taxes, owned Freedom Books, which sold books, tapes and packets encouraging customers not to pay income tax. Last week, a federal jury in Las Vegas convicted him of aiding and assisting in the preparation of false returns filed by others, of conspiring to defraud the United States, and of income-tax evasion and filing false income tax returns for the years 1997 through 2002.

This was the third time Schiff has been convicted of tax offenses, the Justice Department said. He faces a maximum sentence of 43 years in prison and $3.25 million in fines, the department said.

Earlier, a federal judge in Seattle sentenced Gary Kuzel, a certified public accountant from Downers Grove, Ill., to 24 months in prison for his role in Anderson's Ark, an organization that sold fraudulent tax shelters and investment scams to taxpayers. From 1996 through 2001, AAA had about 1,500 clients, nearly 300 of whom reported more than $120 million in fraudulent income-tax deductions, according to the government.