Tax bills could put college out of reach
Ijoin my colleague, University of Michigan President Mark S. Schlissel, to raise concerns about the Tax Reform and Jobs Act passed Nov. 16 by the U.S. House of Representatives. We believe it contains provisions that will make it harder for students to earn a college degree, at a time in which the value of higher education has never been greater.
Young people with bachelor’s degrees stand to earn on average nearly $1 million more in their lifetimes than high-school graduates, and states with the highest rates of college attainment are among those with the fastest-growing economies. Throughout the past century, higher education has served as a key driver of social mobility and economic growth in American society.
Provisions in the bill undermine students by ending the tax benefits that are designed to make education more affordable.
The U.S. Senate will take up its version of the bill soon, and we urge the passage of a smarter tax-reform bill, one that that protects the interests and aspirations of our students.
The House bill repeals current tax incentives, including the Student Loan Interest Deduction, the tax-exempt status of tuition waivers for graduate students serving as teaching and research assistants and the above-the-line deduction for qualified tuition and related expenses.
This means interest on student loans would be treated just like credit-card interest — neither would be deductible, at a time when many are struggling to repay their student loans. Graduate students’ tuition waivers would be taxed. And students and parents from families with moderate incomes no longer would be able to deduct up to $4,000 in qualified higher-education expenses from their taxable income.
The House bill also repeals or devalues key credits that help low- and middleincome students, including the Lifetime Learning Credit, the Hope Scholarship Credit and the American Opportunity Tax Credit. The lower-income students who use these credits are those who can least afford to pay more for their educations.
Another provision of the House bill repeals the tax exemption for education assistance provided by employers, also known as tuition remission.
These aspects of the current federal tax code make it possible for more people with talent and a strong work ethic to earn a college or advanced degree. Our universities are doing their part to keep college affordable, as well.
The Ohio State Tuition Guarantee freezes tuition, fees, and room and board for incoming first- year students for four years. Ohio State also provides aid to ensure the full cost of tuition and fees is covered for all in- state students on the Columbus campus who qualify for Pell Grants.
The University of Michigan’s Go Blue Guarantee offers free tuition for four years of undergraduate study on the Ann Arbor campus for in- state students from families making up to $65,000 per year. Increases in financial aid and restraints on tuition growth mean that it actually costs less to attend Michigan and Ohio State today than it did 10 years ago for many in-state undergraduates who receive need-based financial aid.
Our affordability commitment is possible only because of the generosity of our donors. We also urge our elected leaders to preserve the tax benefits of charitable giving.
As state support for public higher education has diminished, universities have relied more and more on private philanthropy to fund scholarships and support education and research programs.
Individual donors are also significant contributors to university endowments, which help fund libraries, labs, arts programs and many other educational activities in addition to financial aid. The House and Senate bills concoct a new tax on endowments at certain private colleges and universities that will take investment returns on donor gifts and redirect them elsewhere.
On Saturday, the two of us will join millions of Michigan and Ohio State fans worldwide in cheering on our respective football teams. The football rivalry between our two great public universities captures the attention of generations of Buckeyes and Wolverines.
As leaders of those two universities, we hope that the needs of future generations are also worthy of attention and support. When it comes to ensuring that our students can contribute to the intellectual and economic growth of our society, we are on the same team.
We have faith in a brighter and more prosperous future for our nation. Students from all walks of life and all family backgrounds will lead the way in making that future a reality — if we enact tax reforms that continue to support their educational dreams.