We’ve been telling students for years that a college education is the best path to the American Dream, but that path may soon get even rockier if Republicans controlling the U.S. House, Senate and Oval Office secure passage of a devastating tax bill that will not only saddle them with extraordinary national debt for the coming generation but also make it harder to afford college and graduate school.
So much has been written and said about the impact of the legislation– mainly in how it will slash taxes for corporations and the richest Americans while ultimately hiking taxes for millions of middle class Americans and blowing up the federal deficit by $1.4 trillion in the first decade. Whether you’ve been paying attention to these numbers depends a lot on whether you are willing to trust the estimates provided by the nonpartisan Joint Committee on Taxation –or dismiss this respected Congressional organization for spurring “fake news.”
But here’s what’s not getting a lot of attention–the impact on new college graduates. According to Inside Higher Ed:
Most in higher education view the House version as substantially more harmful for students and colleges than the Senate bill, but many also have major concerns about the Senate legislation.
Both bills would create significant potential new tax burdens for higher education institutions and would, college leaders predict, adversely affect charitable giving and state budgets that support public colleges and universities.
….Student and faculty groups staged protests across the country this week against the elimination of the student tax benefits. The protests focused in particular on a provision of the House bill that would tax graduate student tuition waivers as income — a change those groups say would make graduate education unattainable for many students.
Here’s how the graduate school penalty was explained in this article:
It taxes free tuition as though it were earned income. Imagine you’re a science Ph.D. student working in a lab. Despite years of training, you’re not very well paid, making $30,000 a year or so. But you can get by because the university waives your tuition, which might otherwise cost $50,000 a year. The Republican tax plan would redefine that $50,000 in unpaid tuition as income; so instead of paying taxes on $30,000 in salary, you would suddenly get taxed on $80,000 – with no additional cash in your budget to pay the IRS.
Also at risk is the modest tax deduction for student loan payments, which doesn’t do much to ease the crippling debt that averages out at more than $30,000 per borrower and exceeds $1 trillion nationwide. Still, every little bit helps. Currently, nearly anyone with student loans can subtract as much as $2,500 in interest payments from their income before calculating taxes. The legislation would slash this tax break and stick student loan borrowers with a tax hike of up to $625 a year.
While the most egregious of these student tax hikes were eliminated in the final version of the Senate’s tax bill approved over the weekend, these provisions still exist in the House bill.
So this is what we’ve come to as a society, punishing newly minted grads for their audacity in pursuing advanced degrees–specifically the grads who need to work for their tuition because they don’t have wealthy families who can cover the costs of graduate school.
This is deeply personal for me. I have a daughter applying for PhD programs, and the only universities she will consider are those who will waive or deeply discount her tuition. If she had to pay takes on that scholarship break, she couldn’t afford it.
There are so many financially vulnerable people being screwed in the GOP tax plan, so it’s no surprise college students are in the mix. But if this plan passes intact, it’s only going to make it harder to convince students that a college degree is worth the hard work and the investment.
Photo courtesy of The Verge
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