The U.S. Senate passed a bill for tax reform early Saturday morning aimed at inciting economic growth over the next decade. Although the Senate’s bill and the House of Representatives’ bill varied in some of their provisions, both versions are likely to adversely affect higher education, with major implications for educational institutions like Boston University.
The two bills can now be ironed out through either a conference committee, or the House could vote to accept the Senate’s version of the bill. This process is critical to the future of students in higher education, as the differences between the proposed legislatures are significant, BU President Robert Brown said.
“The Senate version of the tax bill, although still very unfriendly to private higher education, has taken out some of the more onerous clauses that are in the House version,” Brown said.
One of these key differences between the bills involves the student loan interest deduction clause, Brown said. The House bill proposes to eliminate entirely, while the Senate bill makes no mention of it.
Such legislation, if passed, would make higher education less attractive to students, according to William Keylor, a professor of history and international relations in the Frederick S. Pardee School of Global Studies.
Groups of angry graduate students from schools across the country have even been taking their concerns to Capitol Hill and protesting outside Speaker of the House Paul Ryan’s office, Inside Higher Ed reported.
“[The new tax code] will make it much more expensive to pursue graduate education,” Keylor wrote in an email. “Students will no longer be able to deduct the costs of servicing their debts and many universities will have to pay taxes on their portion of their endowments, which will lead to an increase in tuition.”
Both bills have negative implications, though the House version is worse for universities and their students, BU economics professor Laurence Kotlikoff said. This kind of tax reform could be seen not only as harmful to private universities, but also as an “attack on public education,” the Graduate School of Arts and Sciences professor said.
“[One threat] to higher education is taxing endowment,” Kotlikoff said. “Another is … taxing tuition remission for faculty and staff and for their kids … Making interest on student loans deductible is another [issue], and a fourth thing is taxing tuition.”
The new tax plan will likely shift the responsibility of public education further away from state governments, Kotlikoff said, presenting a scenario that could potentially become problematic.
There are certain provisions within both the House and Senate bills that would eliminate the deductibility of state income taxes, Kotlikoff said. A portion of the revenue generated from these kinds of taxes is used to fund education within the states, including elementary, middle and high schools, community colleges and state universities.
Kotlikoff said he anticipates that once the government decides to make these state taxes non-deductible, many people who can’t afford to pay the full amount simply will not, reducing the amount of government funding that schools and colleges receive.
“The inclination of voters to want to pay state income taxes when it’s not deductible and when the government’s not sharing the burden will go down,” Kotlikoff said. “This could spell the demise of public education as we know it.”
Several students said they’re concerned about what the new tax code could mean for the future of higher education in the United States.
Moyra Richards, a senior in the College of Arts and Sciences, said she is skeptical of this bill and the effort behind it because she thinks it is likely to undermine higher education.
“I do know a fair amount of graduate students depend on those kinds of things — waivers, etcetera — and graduate school is really expensive,” Richards said. “I wouldn’t look too favorably on it as someone who is trying to go to grad school.”
Christina Luo, a second-year graduate student in the School of Law, said the tax bill would mean that if graduate students who receive a stipend also have their tuition waived, the waived tuition will count as taxable income, meaning they will be taxed on income they will not actually receive.
Luo added that although the new tax law will not affect law students at BU, it will affect other graduate students at the university, sending a clear message about the government’s priorities.
“I’m not a fan of this tax bill,” Luo said. “I think it sends a clear signal that we don’t value or we are giving a negative consequence, almost, to those who pursue PhDs or higher education, which sends a bad message, in my mind.”
Cesar Diaz, a sophomore in the Sargent College of Health and Rehabilitation Sciences, said he has concerns over the newly passed bills.
“I know a lot of people for whom receiving financial aid is very important,” Diaz said. “If they want to pursue a higher education … there’s a financial constraint holding them back, [and] that just shouldn’t be the case.”
