Major tax overhaul impacts college students
By Kristian Evans, Sports Editor
As Congress inches closer to passing the most significant overhaul in the American tax system since the Reagan administration, college students are determining how the reform will impact financial planning going forward.
The Senate recently passed its version of the Tax Reform with a 51-49 in a tension filled vote last Friday night. Senate Democrats complained that they were given mere hours to read and vote on a 500-page bill. Despite calls to postpone a vote until the following Monday, the GOP majority moved forward with a vote along with the exception of Tenn. Republican Bob Corker who opposed the bill’s contribution to the national deficit.
The details of the bill have yet to be finalized; both the House and Senate proposals contain changes to how tuition is taxed at both the undergraduate and graduate level. The House bill looks to repeal deduction on student loan interest, placing a cap at $2,500 for deductible interest, potentially increasing the task and duration of paying back student loans. It also eliminates a provision that allows employees to receive benefits from employers and help pay for school while an individual also works.
In addition, the House tax bill would levy a new tax on waivers given to graduate students who attend school free of charge, and the bill would most significantly impact the money allocated for living expenses to graduate students. This in turn makes graduate programs more expensive for many who receive full funding. Less money goes to housing or other considerations because graduate students would have to pay tax on their stipends.
The Senate bill as it currently stands does not contain either of those provisions, but with the legislation entering conference committee, it remains to be seen what the final version of the legislation will look like.
While students will certainly be impacted by those proposed changes, private universities, such as Augsburg, also will see changes to how endowments are taxed. A proposal in the Senate bill decreases taxes on endowments for private universities, though that particular clause was amended to only include universities with a $500,000 endowment per student ratio, a mark that Augsburg does not meet.
With the total student debt in the United States exceeding a trillion dollars and impacting around 40 million Americans, any changes to how tuition is taxed and to how universities operate stands to impact the students of Augsburg and the financial future of the college. Any increase to the amount of money students pay adds more hurdles to an already grueling process, further threatening the financial future of those who wish to seek a college education.
This article first appeared in the Friday, December 8, 2017, Edition of The Echo.