House tax bill reflects rift between GOP, higher education
WASHINGTON — Ending a tax deduction for interest paid on student loans. Raising taxes for more than 100,000 graduate students who receive tuition waivers. Imposing a levy on endowments at certain private colleges and universities.
These actions are anathema to higher education leaders across the country. Yet they all appear in the Houseapproved Republican tax overhaul, evidence of a growing disconnect between large segments of the GOP and colleges that, for generations, have wielded enormous clout on Capitol Hill.
“I didn’t see it coming,” said Robert Caret, chancellor of the public University System of Maryland. “Obviously, there’s a very different tenor here in Washington.”
The bill the House passed Thursday would deliver a $1.5 trillion tax cut, with benefits tilted toward corporations, business owners and wealthy families. Republicans say the cut will spur economic growth, helping families, students and schools with a simpler set of revenue rules.
“Do we want a complicated tax code that gives these small, sometimes invisible benefits to certain Americans — that by the way, a lot of Americans don’t take advantage of because they don’t know they exist?” Rep. Carlos Curbelo, R-Fla., said this month as the Ways and Means Committee considered a Democratic measure to preserve education initiatives. “Or do we want a tax code that treats everyone more fairly, that provides growth opportunities for more people, that gives every American the opportunity to rise, to thrive, to flourish? That’s the debate we’re having here.”
Outside Washington, there are signs that Republican support for higher education is ebbing.
In July, the Pew Research Center found that 58 percent of Republicans and Republican-leaning independents believe colleges and universities have a negative effect on the way things are going in the country. That was up from 37 percent two years earlier.
By contrast, a large majority of Democrats and Democratic-leaning independents — 72 percent — said this year that colleges have a positive effect.
Gallup pollsters reported a similar partisan split in August, with far fewer Republicans than Democrats expressing confidence in higher education. Many Republican skeptics described colleges as “too liberal” and complained they pushed an agenda that does not allow students to think for themselves.
Those opinions may have been shaped by debates over free speech that have erupted on campuses nationwide. Congress has scrutinized incidents in which conservatives say their views were suppressed. The Senate Judiciary Committee held a hearing in June on what it called “the assault on the First Amendment on college campuses.”
Republicans are also ever-mindful of President Donald Trump’s political base. He won the 2016 presidential election with strong support from white voters who do not have a college degree — by a margin of more than 2 to 1, according to network exit polls. White college graduates were more split, favoring Trump by a slim 3 percentage points.
Historically, higher education has drawn bipartisan support from Capitol Hill. Democrats say the House bill breaks with that tradition.
The 1.4 percent excise tax on college endowment income would raise $2.5 billion over a decade, according to the congressional Joint Committee on Taxation. Treating tuition reductions for graduate students and others as taxable income would raise $5.4 billion. Repealing the student loan interest deduction would raise $21.4 billion.
The Senate version of the tax bill does not include the tax increase on graduate students and would preserve the student loan interest deduction.
But like the House bill, it would impose a tax on investment income for private colleges with endowments worth at least $250,000 per student. That would affect about 60 to 70 schools, including the Ivy League and small liberal arts colleges.
“Extremely puzzling,” said Mary Sue Coleman, president of the Association of American Universities, which represents top research schools. “Endowments allow universities to do a lot of good in the world.”
Lobbyists also fret that other provisions of the Senate bill could squeeze state funding for public higher ed and deter charitable contributions.