If it isn’t challenging enough for hard-working middle class families to help their children pursue an affordable higher education, the GOP delivered another blow to the American dream through the tax reform bill passed last week in the House. Despite rejections by five of his fellow NY representatives, our congressman, John Katko, voted in favor of this bill.
Let’s put the effects of this bill on higher education in context. We all know too well about student loans and the burden they have on college graduates. It can take decades to pay off these loans and make it challenging for graduates to build their financial portfolio in other domains — like buying a house or saving for retirement. With the new tax bill, the interest paid on student loans will no longer be tax deductible. This deduction is used by millions of Americans.
Further, the bill also takes aim at tuition benefits across all categories of higher education: undergraduate tuition benefits (free/reduced tuition received by students whose parents are employed by LeMoyne, SU), and graduate/doctorate tuition waivers (tuition waivers provided universities to entice students to attend, help teach undergrads, and provide research assistance) by treating these tuition waivers as taxable income.
An example: If you are a single student, and your university’s tuition is $50,000 a year, and you receive a stipend of $32,000 a year, you are now being taxed on $82,000 in income. This equates to a tax bill of $12,150 (compared to the $4,800 that you would pay in taxes today). The new proposal decimates any small bit of affordability for graduate students — leaving less than $20,000 for you to budget for living expenses, moving costs, travel home to see family, or attend research conferences (to be competitive in your field after graduation).
The GOP tax plan will make graduate school an impossible dream for many of our brightest and most talented young people and many may pursue graduate work abroad. This has the potential to have a significant and broad effect on our country as we will no longer be a leader in areas of science, engineering and medicine due to an American brain drain.
A loss of a popular student loan deduction, and a new tax on phantom income? We must hold John Katko accountable in 2018 for yet another vote that hurts the middle class at the expense of the wealthy.