SCHUNDLER: What is College Going to Look Like Under the Tax Cuts and Jobs Act?


The GOP’s Tax Cuts and Jobs Act, which has now passed both Houses of Congress, has weathered a diverse array of reactions. Many Republicans have stood steadfastly in favor of the bill, believing it will bring growth and gainful employment to the United States in higher numbers, while most Democrats have openly offered their criticism. This piece of legislation, like virtually every other, has become a partisan battle of buzzwords, smearing, attacks and defenses. One area of the bill, however, has raised questions from both sides of the aisle — that is, the stipulations affecting higher education.

Students, professors, and executives have stood against the act’s reforms impacting colleges and universities. President DeGioia for example, expressed his concerns via email on November 21st, imploring the Georgetown community to educate themselves on the bill and voice their concerns at portions that impact loan deductions and tuition assistance. The Republican response to criticisms like these has been muddled, partly due to the muffled Republican presence on campuses, but also perhaps because college-aged Republicans themselves are not positive of where they stand. In order to cut through the hostile noise, allow me to provide a brief analysis of the Tax Cuts and Jobs Act as it relates to college students and recent graduates.

Before I address what the current version of the bill does well, I should add that President Degioia’s complaints will be addressed and likely resolved when the bill formally reaches a joint committee — this is according to a representative of Congresswoman Cathy McMorris Rodgers whom I questioned on the issue. Interest deductions, for example, may ultimately stand. However, in the case that such resolutions do not occur, I will address the current versions of the bill.

With regard to educational assistance provisions, the Tax Cuts and Jobs Act actually performs well. Many of the programs the bill dashes are currently overlapping, creating complications and loopholes. H.R. 1 streamlines educational benefits into a consolidated credit, The American Opportunity Tax Credit. College students will still be able to deduct many tuition expenses from their tax sheets. In addition, the bill dramatically expands 529 education savings accounts (ESAs). With an ESA, parents can choose to withdraw their students from a public school if they so choose and take with them a deposit to be invested into a college savings account. Currently, ESA savings total approximately $300 billion and 75% of the money has gone to middle and working class families  — we ought to note that President Obama proposed eliminating ESAs completely in 2015 and was overwhelmingly opposed by public opinion.

Formerly, ESAs could only apply to college tuition expenses and impacted select individuals. But in H.R. 1, the savings can be applied to any grade from kindergarten to college, homeschool, online, or in the classroom, and are available to all taxpayers, giving struggling families a viable platform to save for the best education possible, with the option to save beginning from the moment a child is conceived. Therefore, lifetime public school students, too, can partake. Finally, the savings also apply to apprenticeship programs, a proven method of offering low income families a cheaper and faster method of obtaining vocational skills to compete in the job market.

President Degioia has also criticised the Tax Cuts and Jobs Act for striking loan interest deductions. The bill does strike these deductions, but firstly, this is a narrow focus, and secondly, such deductions may not actually serve college graduates as well as they think. The criticism has too narrow a focus because it neglects the holistic impact of these tax cuts. The funds salvaged by loan interest deductions are currently offset by a burdensome tax code and an abysmal job market. The average single student will save much more under the Tax Cuts and Jobs Act through lowered rates, a doubled standard deduction, more streamlined educational credits, and a job producing economy than they ever did by deducting the interest on their student loans. And to be frank, our current college lending policy is quite clearly costing students egregiously more than they can handle. Allowing government to incentivize irresponsibility on the part of institutions who know well that government will compensate their their tuition hikes does no good to students. Addressing the lending crisis (and subsequent tuition bubble) in higher education will not be pretty, but if we hope to send any of our children to college in the future, we must act now. H.R. 1 is doing that by loosening government’s grip on loan payments with this small step.

In conclusion, we must remember who benefits from our current tax code as it concerns higher education. No college administrator will support this bill because it is they that benefit from loopholes and provisions that bolster their paychecks at the taxpayer’s and student’s expense. The Tax Cuts and Jobs act approaches the cost of education holistically and rationally. And while many of the contested provisions may be revised to suit public opinion, I see H.R. 1 as a net victory for American students of all levels in its current form.