With a GOP sponsored tax reform bill already passed through the U.S. House of Representatives, and a vote on a similar proposal in the U.S. Senate likely coming soon, the tax system may look drastically different in the near future. Plans for tax reform, however, have been largely partisan, with the House passing the bill with no support from Democrats and 13 Republican representatives rejecting the bill. The upcoming Senate vote seems to be much closer. The reform proposals are quite comprehensive, and unfortunately, students and middle class families may suffer under this new reform.
Under the House of Representatives’ Tax Cuts and Jobs Act, University of Minnesota students would see repeals in many tax exemptions, provisions and credits they currently enjoy. Amidst claims by Republican leaders that the tax bill would cut taxes for middle class families, the House bill would burden many families that send students to receive post-secondary education. Among the repeals affecting student finances, interest paid on student loans would no longer be deductible, and tuition waivers granted by universities to graduate student would be considered a taxable income. Overall, students stand to lose about $65 billion over the next decade. This additional financial burden could be the difference between continuing education and dropping out for many students. Given that the tax plan could take effect Jan. 1, if approved, this change would be a shock that many families and students could not adapt to.
There is seemingly little reason that students' financial mechanisms have been targeted other than to mitigate the $1.3 trillion deficit that the bill would create. We feel the softening of the tax cuts should not fall upon students, who are often more financially burdened than other groups of individuals. The U.S. Higher education should become more accessible to every individual, regardless of financial status. Repealing student-related tax exemptions and credits does not accomplish this goal — it does quite the opposite.
There is still hope for students and those negatively affected by the Tax Cuts and Jobs Act — by no means is this a final draft. There are several steps that need to be taken to ensure that a new tax bill becomes law. First, the Senate is currently drafting their own version of a tax reform bill. This bill will be up for debate and approval shortly. As it currently stands, the Senate version of the bill does not repeal deductions on student loan interest or tax tuition waivers. That does not mean that the Senate’s version is perfect. If the Senate votes in favor of the tax bill, then a special committee would merge the two bills together, and it would be voted upon by both houses of Congress, which would possibly result in the respective sections being added. At the end of that process, the bill would be sent for approval by the President.
We urge lawmakers to think of all the students that would be negatively affected by the changes proposed in the Tax Cuts and Jobs Act. Higher education should be encouraged and available to as many families, with as many economic, cultural and social backgrounds as possible. The new updates this bill proposes are not encouraging. There still is time to change the minds of lawmakers and contacting your representative, in either the House of Representatives or the Senate, to share your thoughts and concerns may have a profound effect on legislation. A deficit caused by enormous tax cuts should not be softened using the future of students across the country.