Good afternoon. I would like to use my remarks to read a statement for the record expressing Indiana University’s deep concerns over proposed tax reform legislation that was recently approved by the U.S. House of Representatives and that the U.S. Senate is expected to vote on this week.
We appreciate the desire to simplify and strengthen the nation’s tax code, and we also recognize that our legislators have many competing interests to balance. However, we must oppose legislation that would undermine our core missions of education and research and price prospective students and their families out of a postsecondary education at a time when a highly advanced workforce is needed to propel our state and our nation forward.
As experts have concluded, the bill that passed the House – H.R. 1, or the Tax Cuts and Jobs Act – will have serious and far-reaching negative implications for U.S. higher education. Indeed, its proposals threaten to reverse much of the major progress we have made in recent years in encouraging saving for and participation in postsecondary education, helping students and their families pay for college, and reducing the amount of student borrowing.
Earlier this month, the American Council on Education, on behalf of the Association of American Universities, of which IU is a member, and 45 other higher education associations, sent a letter to the leaders of the House Ways and Means Committee expressing strong opposition to several harmful provisions in the House legislation. In its letter, the ACE noted that these provisions would make higher education less accessible for low- and middle-income students. It also cited a Ways and Means Committee summary indicating that the bill would cost college students some $65 billion over the next decade.
We are pleased that the Senate’s tax reform proposal leaves intact many of the education tax credits and tax exemptions that help offset the cost of college for students, families, and employers. However, we remain very concerned about the fate of several key benefits that the version the House passed would eliminate and that have been critical to our efforts to keep a higher education accessible and affordable to students and their families, in particular:
- the Student Loan Interest Deduction;
- the Lifetime Learning Credit; and
- Employer-Provided Educational Assistance.
Currently, IU has 3,500 graduate students who are working as teaching and research assistants in exchange for a tuition reimbursement, which is typically of far greater value than the actual income they would otherwise have received. Under the bill that passed the House, these students would have to report this tuition forgiveness as personal income, which would be particularly devastating for their day-to-day finances. It will also make it more difficult for IU to attract the best and brightest students to the graduate programs on which the growth of our state and nation depend.
Taxing graduate school tuition waivers promises to have a profound negative effect on the ability of our nation’s research universities to impact areas critical to strengthening our nation’s competitiveness in the global marketplace. According to data from the U.S. Department of Education, of the 145,000 graduate students nationwide who would shoulder a higher tax burden, about 60 percent are studying within STEM fields. We simply cannot afford to lose ground in attracting those students who we know will drive innovation, guide the development of new technologies, and perform the type of path-breaking research that will improve our economy and quality of life.
Repealing the popular Student Debt Interest Deduction – on top of counting tuition waivers as taxable income – would make it enormously more difficult for our students, especially those from low- to middle-income families or underrepresented minority groups, to repay the loans needed to seek and earn a master’s or doctoral degree.
Finally, approximately 5,000 IU employees, their spouses, and their dependents receive qualified tuition reductions annually. Taxing these reductions may prevent some IU faculty and staff from sending their children to the university where they work and where they know they will get a high-quality education.
Thus, in the coming days, we will continue to vigorously express our strong support for amendments that would reduce the negative effects of this legislation and oppose amendments that would cause further harm to the university, its students, and its staff.
We will also continue to work closely with organizations like the ACE, AAU and APLU, as well as with our state’s congressional delegation, to ensure any bill that ultimately emerges from Washington is less draconian for higher education. To this end, I want to assure IU faculty, graduate students, staff, and other members of the IU community that our government relations team is working tirelessly here in Indiana and in Washington to help our representatives understand the implications of this legislation.
The education we provide our best and brightest students is one of the most powerful contributions our country’s colleges and universities can make to improving our communities and our society at large. IU will not waver in its commitment to educating engaged citizens who will shape the future of our state, nation, and world.
I am glad to have this opportunity to speak with you directly and publicly about this very important matter. We will continue to keep you apprised of any new developments as Congress considers changes that will impact IU and its students.