Tax plan worries colleges in Texas
Proposals would hit endowments, tuition waivers
The proposed federal tax overhaul could affect large university endowments and graduate student tuition costs, leaving higher education groups worried about the potential impact on student costs and university finances.
The measures in both houses of Congress would tax large private university endowments, including those of Rice University and Trinity University in San Antonio. The House plan would also impose a tax on student tuition waivers, potentially burdening graduate students with high fees. The Senate plan does not include those provisions.
A House vote is expected Thursday.
Private university endowments larger than $250,000 per student would have to pay a 1.4-percent excise tax under the Senate plan. These large endowments have often faced criticism from Republicans, who have questioned how universities choose to spend — or save — their funds as college tuition costs grow.
Trump’s criticism
On the campaign trail, President Donald Trump gave a fullthroated criticism of college spending and endowments.
“They should be using the money on students, for tuition, for student life and for student housing,” he said. “That’s what it’s supposed to be for.”
Rice spokesman B.J. Almond said the university is still reviewing the tax plans “and doesn’t want to speculate” on their potential impact.
Gary Logan, Trinity’s vice president for finance, said Tues- day that the excise tax was one of the provisions that most concerned higher education groups.
“The immediate effect of the excise tax would be the need for the university to offset the loss of that money,” Logan said. “The question is, are we going to (have to) pass that tax onto the current students?”
Logan said heunderstands the need for tax reform but that lawmakers in Washington need to try to cut expenses before creating additional revenue streams.
“It’s not helpful,” he said. “It pits special interests against each other.”
The Association of American Universities, which includes Rice, the University of Texas at Austin and Texas A&M University, said in a statement this month that it is “troubled” by the proposed excise tax on private university endowments, which support student financial aid, career counseling and medical research.
Both plans place “too much of the burden of fixing our outdated tax system on America’s nonprofit universities,” the group wrote.
The Association of Public Land Grant Universities, which represents the University of Houston, Texas A&M University and the University of Texas at Austin, also criticized portions of both plans.
The Chronicle of Higher Education estimates that the excise tax would affect fewer than 65 universities. The Republican-led proposals come as colleges and universities have faced criticism from rightleaning voters. One recent Pew Research Center survey found that 58 percent of Republican or right-leaning respondents believe higher education has a negative effect on how things are going in the U.S.
Tuition waivers
A separate provision in the House’s plan would combine several education tax credits into one program. The House bill would also tax tuition waivers used by graduate students.
This particular proposal attracted the attention of student activists nationwide, who urged lawmakers to reconsider. Many graduate students have adjusted gross incomes of less than $20,000, according to the Association of Public and Land-Grant Universities.
Counting tuition waivers as taxable income would make it difficult for some students to stay in school, said Sydney Gibson, the president of Rice’s graduate student association.
“We’re already on the brink in terms of paying for housing and other costs associated with living in Houston,” she said. “Students may have to drop out completely.”
Gibson said the proposals have been on “everyone’s radar,” from Rice to the Baylor College of Medicine, where she works.
Rice’s graduate student association may organize a letter-writing campaign to elected officials once students better understand the bill, she said.
Leaders of UH’s graduate student association said in an email Tuesday that they may organize an informational discussion on the proposal.
The group’s co-presidents, Hannah Locke and Jesus G. Cruz-Garza, released a statement Wednesday calling for elected officials to “reassess the importance of investing in the financial sustainability of higher education.”
“Without extraordinary amounts of external monetary income, the current GOP tax proposal would make obtaining an advanced degree and building knowledge on cancer biology, architecture, social work, educational leadership, or engineering financially impossible,” they wrote.
“Without tuition waivers, higher education becomes an educational opportunity only afforded to (the) independently wealthy.”