Understanding How the Tax Plan Will Affect Higher Education
[adapted from a statement by President John Williams of Muhlenberg College in Allentown, PA]
The House and Senate are now reconciling versions of the Tax Cuts and Jobs Act—the farthest-reaching national tax legislation in decades. The House version contains provisions that, if passed into law, will make it harder for many young people to afford college. The potential impacts include:
- Students and their families would no longer be able to deduct up to $2,500 of interest payments on their federal student loans. In many institutions more than 50 percent of students have federal student loans. Losing this longstanding deduction would affect all of them, and make it more difficult for many students and families to afford college.
- Certain students and families classified in this tax bill within particular lower- and middle-income brackets would lose such deductions as the Lifetime Learning Credit and American Opportunity Tax Credit. These programs were designed specifically to make college more affordable for those already struggling to make ends meet.
- Another provision would make college more expensive—perhaps prohibitively expensive for many children of faculty and staff that work at colleges and universities by requiring them to pay income tax on commonly offered tuition remission benefits. This change would also cut into one of the most important ways that colleges and universities have to recruit and retain the most qualified employees.
- Changes to the standard deductions that are allowed for charitable contributions would decrease the incentive for alumni, parents and other donors to make gifts to colleges and universities. Similar provisions are in both the House and Senate versions of the bill. This change would risk decreasing the resources that institutions of higher education have available for financial aid, scholarships and other donor-supported investments.
- Another provision would create a change that prevents colleges and universities from accessing tax-exempt bonds for construction. Universities and colleges would lose the ability to use these types of bonds to finance essential infrastructure projects, leading to increased student costs. These types of construction projects support the local economy, and are critical to maintaining and creating new innovative academic spaces to meet the needs of the future.
- Other provisions, such as taxing graduate-student education benefits and stipends, will make graduate education impossible for many American students and would likely result in a “brain drain” as students look elsewhere for graduate study and eventual careers.
If passed these provisions will make it impossible for many American students to afford a college or university education. It undercuts one of their most valuable pathways to achieving their dreams, building better individual lives and strengthening the economy. The value of a college degree to each individual student—and to our larger society, which benefits from their contributions—is incalculable. Legislation that devalues an endeavor focused on advancement of the mind and the community does damage to our nation’s future.
Whether we work in higher education, plan to attend or send our children to college or simply value education as a national priority we should all make effort to become fully informed about this legislation and the associated issues. All of us must share our views with our elected representatives.
Information on how to contact members of the house and senate can be found by clinking on the links below:
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