The Republican tax plans making their way through Congress would hurt Oregon college students, especially ones who attend private, nonprofit schools.
The U.S. House and Senate have different versions of their tax plans, which must be negotiated into a final edition if Congress is to pass tax reform this year.
In contrast with the 1986 tax reforms that President Ronald Reagan signed into law, only the majority Republicans are writing the tax bills this time. The 1986 reforms, in which Oregon Sen. Bob Packwood was influential, involved a bipartisan group of Republicans and Democrats. Congress overwhelmingly passed the legislation after months of discussion and negotiation.
The current House Republican plan would eliminate the income tax deduction for student loan interest, which would affect graduates and their families who itemize their tax deductions.
It also would make graduate students pay income taxes on the tuition waivers they receive in return for working as teaching or research assistants. The American Chemical Society and other organizations have spoken against taxing these tuition waivers, predicting the tax would have a chilling effect on students pursuing graduate degrees, especially in science, technology, engineering and math. Graduate school tuition can be quite expensive, so paying taxes on the value of the waivers would make master’s or doctoral degrees unaffordable for many students.
The current House and Senate tax plans also would add a 1.4 percent tax on investment income at private schools whose endowments are worth at least $250,000 per full-time student.
According to the Chronicle of Higher Education, only three private, nonprofit colleges in Oregon currently would be subject to the excise tax — Lewis and Clark College and Reed College, both in Portland, and Willamette University in Salem. However, the tax would set a worrisome precedent that eventually could touch smaller university endowments or could expand to other nonprofits.
Endowments subsidize the financial aid that enable many students to attend a private school at an out-of-pocket cost no greater than for a public university. Eighteen private, nonprofit schools are members of the Oregon Alliance of Independent Colleges & Universities. Alliance leaders told state legislators during public hearings this month that 93 percent of their beginning full-time students receive institutional grants, and 28 percent of students graduate with bachelor’s degrees but no debt.
Together, those 18 colleges and universities produce 20 percent of Oregon’s college graduates; 25 percent of all degrees in science, technology, engineering, math and health; 38 percent of education degrees; and half of the master’s and doctoral degrees.
Post-high school education is not a one-size-fits-all endeavor. Students need a broad range of options, including public and private universities, community colleges, trade schools and apprenticeships. The Republican tax plans cut away at that diversity of opportunity.