Pending Budget Plan Spells Big Trouble for Higher Education
Last week, the GOP rolled out their 2018 budget proposal. The long anticipated plan touted cutting taxes by $1.5 trillion over the next decade, with unsurprising big wins for corporations. To make up for some of those cuts, higher education providers, trainees and faculty would be seeing big changes in their taxes and not for the better. The bill includes new taxes on individuals and institutions and taking away tax breaks. The changes in how students and faculty are paid and endowments are protected could raise $65 billion in revenue between 2018-2028.
Little Fish First: The roughly 2 million students in graduate programs in the US, would feel some of the most immediate impacts. Tax deductions for most student loans would be eliminated under the GOP plan. StudentLoanHero (parent company: Lending Tree) estimates that US graduates owe $1.45 trillion in student loans, a shocking $620 million dollars more than we owe as a country in credit card debt. Cutting this tax break would mean big money for the government. It also signals to many how little the administration values education.
The bad news doesn’t stop there for students. Not only would they lose a tax credit many have, they would also now be on the hook for health insurance and tuition as taxable benefits. David Walsh, a Princeton STEM graduate student, did the math and shared his dismal outlook on Twitter.
The pain doesn’t stop there for higher education as faculty would also be feeling the financial pinch if the budget passes. College tuition discounts for faculty, their spouses and children all would become taxable under the proposed plan. For academics who have struggled to stay afloat in an already hypercompetitive environment in order to make take advantage of the tuition discount, the effects would be devastating.
Big Fish, Big Pain. If the budget passes intact, universities would be poorly positioned to help graduate students and faculty impacted by these changes. In their bill, the GOP also put over 160 private colleges on notice that their once untouchable endowments were now fair game for taxation. Warned for years that endowments were growing too large, it still came as a shock to many that the GOP proposed a whopping 1.5% endowment tax. To put that in perspective, Harvard would have to pay $400 million in a single year.
At this point, administrators, educators and students have yet to find a common rallying platform to oppose the new taxes, but if turnout for March for Science was any indication of mobilizing against perceived anti-education policies, expect to see big blowback.
I will update this site as information becomes available.
UPDATE: Check out Ben Ide’s great breakdown of tax rates for graduate students under the GOP proposal.
And New America’s handy map of which school will be big losers under endowment tax.