NACAC: Final Tax Bill Undermines Education

Michael Rose

Arlington, VA (Dec 19, 2017) — The National Association for College Admission Counseling (NACAC) continues to be concerned that legislation aimed at overhauling the nation’s tax policies is poised to negatively impact students, schools, and colleges. The US Senate and House of Representatives are expected to vote on the conference agreement this week and send it to President Trump to be signed into law before the end of the month.  

Unfortunately, the conference agreement keeps the misguided excise tax on investment income generated by endowments at private colleges and universities. The 1.4 percent tax would affect colleges with enrollments of more than 500 students, endowments of $500,000 per student, and, according to press reports, “at least 50 percent of their tuition-paying students ... located in the United States." Endowments help support nearly every aspect of an institution’s operations, including the delivery of high-quality affordable education and programs that support student retention and success. This provision will sap a college’s ability to support its students and plan for future needs. While proponents of this provision argue that few colleges will be impacted, NACAC is concerned about the precedent it sets.

Furthermore, the agreement caps the state and local tax (SALT) deduction at $10,000, which will force state governments to make very difficult and potentially harmful funding decisions. Traditionally, the SALT deduction helped state and local governments fund public services that provide widely shared benefits. Limiting the deduction, which the agreement does, would almost certainly make it harder for states and localities—many of which already face serious budget strains—to raise sufficient revenues in the coming years to fund higher education and other priorities, exacerbating the ongoing decline in state support for higher education. As a result, states would likely be forced to find alternative funding sources, such as raising tuition at public colleges and universities—a move that could force low- and middle-income students out of higher education.

Lastly, NACAC is concerned about the overall fiscal implications of the bill. Non-partisan organizations have estimated that the tax legislation will add hundreds of billions of dollars to the national debt. Unfortunately, this creates immense pressure to make further cuts to already-underfunded federal education programs. Discretionary funds, including those administered by the Department of Education, have suffered substantial cuts over the last several years. Providing such massive tax cuts at a time when the federal investment in education has already eroded will likely reduce educational attainment and exacerbate ongoing economic challenges in our country.

NACAC is pleased that the final agreement maintains the Lifetime Learning Credit; the Hope Scholarship Credit; the student loan interest deduction; and a tax break for educational assistance provided by employers. These provisions help thousands of students access higher education. In addition, NACAC supports the provision that maintains the tax deduction for educators, including counselors, who spend their own money on classroom supplies.

The National Association for College Admission Counseling (NACAC), founded in 1937, is an organization of nearly 16,000 professionals from around the world dedicated to serving students as they make choices about pursuing postsecondary education. NACAC is committed to maintaining high standards that foster ethical and social responsibility among those involved in the transition process, as outlined in the association's Statement of Principles of Good Practice: NACAC’s Code of Ethics and Professional Practices.

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