India has greater demand for higher education than their country can currently support. As described in a Chronicle article this week, a recent gathering brought together Indian and foreign educators, policy makers and analysts to strategize about how to expand higher education in India. As cited in the article, 50% of the population is under the age of 25, yet less than 15% of 18-24 year olds attend college. In addition to a discussion about increasing the number of private institutions in India to provide more opportunities for Indian students to attend College in their own country, a discussion of the for-profit sector was also on the table at the meeting. India does not currently allow private colleges and universities to directly make a profit (though it does sound as though there may be ways that private institutions work around this restriction…). However, some members of the discussion want this to change. Specifically, they want to allow for proprietary higher education, because of potential benefits realized through the tax revenue that for-profits would generate, revenue that could then be turned around and applied to Indian public education. This struck me.
First, I was surprised to learn that India currently does not allow for-profit higher education. I wondered about the restriction, the history there, and how this may be influenced by Indian culture and values. This article, from Forbes India Business magazine, offers some additional information as it chronicles the pursuits of a for-profit Indian entrepreneur who is at the ready to make a profit off education in India. In short, he (and others too) have found legal ways to profit off education in India by creating non-profit trusts and for-profit companies that manage the land and business side of the operations. In this dual model, they are then able to attract investors to the business, which then profits off leasing the space and other commodities to the trust. Now, I’m no business guru, but doesn’t this model exist in the US too?
I was also intrigued by the reasons cited by those in support of allowing for-profits to enter the Indian higher education market—namely the tax revenue that could be turned around and applied to support public education. This was a new consideration for me, and naturally made me wonder about tax revenue from for-profits in the US. Even though I have worked at a for-profit this was not on my radar. Surely US for-profit colleges and universities are generating hefty tax revenue; but how much, and how are these dollars being used? The only resource I could find to help me answer this question comes from a 2007 report put out by the Imagine America Foundation, essentially a foundation established to raise money for ‘career colleges’, ‘private sector colleges’- or whatever you want to call them--- they are the for-profits. This report estimates that for-profits pay 82 million dollars a year in federal and state taxes (a Chronicle article from July of 2007 highlights information from the report—to view the report in full you must register with the Imagine America Foundation, but the Chronicle article captures the relevant points). So our states and the federal government are taking in a sizable sum in tax dollars each year from this sector, but I was not able to find any information about how that money is being used. Given that this was not available, I assume that it is not being earmarked for specific educational purposes, as is being suggested in India.
In looking for additional information on the topic of tax money from the for-profit sector in the US, I came across another interesting article from this October entitled The Case for Making Harvard Pay Taxes. The title of the article was enough to entice me to read it. In short, it is asking if Harvard (or other private non-profits with huge endowments) should be able to continue to be exempt from paying most state and federal taxes. An economics professor from Smith College is quoted in the article as predicting that the federal government, and specifically the super-committee charged with the budget issues, is going to start thinking seriously about if the tax-exempt non-profit college model should continue to exist as it does currently. The article also highlights an interesting case from Princeton, NJ where the local residents are taking issue with the University’s tax-free status. Princeton University does not pay property tax, yet their use of community resources funded by property taxes are significant. The residents cite specific concern about the buildings owned and operated by the University but which are not used for direct educational purposes. Although I’m not knowledgeable enough about tax codes and such to comment on if these issues are indicative of larger things to come on the non-profit tax front, I think that they are important considerations, particularly as current issues in higher education are revolving around our downed economy.
So, what started as a blog about higher education expansion in India has turned into a discussion of tax revenues from our domestic institutions—both for-profits and yes, the non-profits too. When I started this blog I realized quickly this was a big topic to tackle, and one that I did not expect to comprehensively cover in a post. However, I hope that I have raised some awareness about the taxes that colleges and universities pay (or don’t pay…), as this is certainly an important current issue of which we should all be aware in the coming years. As we watch what plays out in India, and as we see changes in our country with federal and state budget discussions, I do think that we will see some changes in this area. If anything, I think that we should seek out more information about how the revenue collected from US for-profits is being used. At least on the surface, I like the idea being explored in India to use those funds to benefit public education and students seeking higher education.
No comments:
Post a Comment