Here’s what Congress’ controversial tax bill could mean for students
Tax bill reconciliation could decide the fate of many university-related tax benefits.Image By: Gina Heeb
State Republicans are celebrating the momentum of their legislative agenda marked by the Senate’s passage of a new tax bill Friday night, while Democrats warn of potential costs to students and universities.
The bill’s passage has been claimed as a victory for general nationwide tax cuts, a cause championed by Wisconsin Republicans for the last several years.
“I’m happy to see Congress is finally following our lead for tax reform by eliminating the alternative minimum tax, the death tax and lowering rates for all Americans,” said state Rep. Dale Kooyenga, R-Brookfield, in a statement. “Although the bill is not perfect, on balance it is a move in the right direction which will result in greater prosperity.”
After the bill’s narrow passage late Friday night, the House and Senate will now be forced to reconcile the differences between their two visions for tax reform, the outcome of which could mean high stakes for colleges.
The House bill, for example, would eliminate tax deductions that benefit many in higher education, including student loan recipients, scholarship beneficiaries and graduate students.
Most notably, it would eliminate the Student Loan Interest Deduction, which allows students to write off up to $2,500 of student loan interest from their taxes.
“Individuals struggling to repay their student loan debt, which totals $24 billion in Wisconsin, will be hard hit because of the elimination of the Student Loan Interest Deduction,” warned state Democrats in a letter to Gov. Scott Walker and Assembly Speaker Robin Vos. “This deduction is an important tool for those with large student loan amounts to manage payments.”
The Senate’s bill includes none of the aforementioned provisions.
It does, however, mandate an increase in taxes on charitable donations, which could be especially impactful for higher education, as many private colleges are dependent on private contributions for funds.
The Senate version of the tax bill also includes a provision that would make revenue earned from university merchandise and apparel taxable. The $1-2 million raked in from Badger gear annually is used by the university for scholarships.
The UW-Madison Alumni Association outlined changes last week they would like to be made to the bill’s current text in a petition to congressional leaders.
The suggestions included retaining the Student Loan Interest Deduction, expanding tax credits for non-conventional students, bolstering graduate student training support, and allowing universities greater flexibility in refinancing debt.
The two chambers will either craft a compromise bill, or the House could very well simply pass the Senate’s existing version.
Either way, Republicans hope to have a final tax bill on the President's desk by the end of the year.Subscribe to The Daily Cardinal Newsletter