Well before it’s even voted on by the Senate, tax reform legislation introduced by the GOP is inspiring much discussion, debate, and pushback. Though the specifics of the plan are likely to evolve, let’s take a brief look at what the proposed legislation could mean for students, their families, and colleges and universities across the nation.
- Student loan interest: Currently, those who borrow to help pay for college are able to reduce their taxable income by up to $2,500 each year to offset the interest paid on student loans. If the GOP bill becomes law, borrowers would no longer be able to deduct that interest, a provision that’s likely to have far-reaching effects on the long-term finances of graduates.
- Tuition waivers: The proposed plan would also tax as income any tuition that schools waive for graduate students who are employed as teaching or research assistants. With higher taxable income in the form of waived tuition, students would need to reserve a (sometimes quite significant) portion of their stipends for yearly tax payments.
- Endowment earnings: The GOP plan would also tax the endowment earnings of private universities that have at least 500 students and endowments of at least $250,000 per student. Though this provision would only affect about 60−70 schools nationwide, the new tax burden would likely reduce the monies available at those institutions for student financial aid.
- Lifetime Learning Credit: Finally, as currently written, the Republican plan eliminates the Lifetime Learning Credit—a tax benefit that currently allows workers to deduct the cost of part-time coursework. Elimination of this credit would likely discourage adult continuing education and educational “retooling” for displaced workers.
So what does all this mean for colleges and universities? The better question may be “what doesn’t it mean?” Clearly, the national debate about the value of higher education is continuing and, in some cases, driving the proposed changes in legislation.
For institutions of higher education, the lesson is clear: Perception matters now more than ever. Together, colleges and universities must continue to show the value—personally, professionally, nationally, and globally—that higher education provides. Breakthroughs in research, medicine, and technology must continue to be demonstrated and celebrated at all levels. Private and public schools can help drive the dialogue by engaging their constituents more holistically and reminding them why an educated citizenry is central to US leadership, innovation, and security.
This is ultimately a challenge of engagement and communication. It’s an opportunity to serve students by bridging political divides, changing hearts and minds, and securing the future of American education.