House Republicans on Thursday pushed through tax reform legislation widely opposed by higher education leaders who say many of its provisions will make a college degree less attainable and hurt the financial strength of institutions. The bill passed by a 227 to 205 vote with 13 Republicans voting against…
House Republicans on Thursday pushed through tax reform legislation widely opposed by higher education leaders who say many of its provisions will make a college degree less attainable and hurt the financial strength of institutions.
The bill passed by a 227 to 205 vote with 13 Republicans voting against the plan; it did not receive support from any Democrats.
The House plan, which was introduced just two weeks ago and did not receive a single hearing, dramatically lowers corporate tax rates and shrinks the number of income tax brackets. It has come in for criticism from higher ed both for the offsetting revenue it seeks from institutions and the elimination of benefits for students.
One provision would apply a 1.4 percent excise tax to private college endowments valued at $250,000 per full-time student. That provision would affect fewer than 100 higher ed institutions, but opponents say it penalizes colleges for having a stable revenue stream. It also doesn't redirect that money to student aid -- even though a chief complaint of endowment critics on Capitol Hill is that spending from those funds doesn't do enough to lower the cost of college.
The plan also eliminates tax-exempt private activity bonds that private -- and some public -- institutions use to lower the cost of borrowing for new construction. Effectively this would make it more expensive for colleges to build or renovate facilities. Because wealthier colleges can frequently raise money to build without borrowing, the impact of this provision would be greatest on institutions of modest means.
Among the most heavily panned provisions of the plan affecting students directly is the repeal of a tax code provision allowing colleges and universities to waive the cost of tuition for graduate students. That change would effectively impose a new tax on graduate students themselves, a move that student groups have warned would make graduate education unattainable for low- and middle-income students in a range of disciplines.
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