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NASPA perspective on pending tax bills and PROSPER Act

Policy and Advocacy
December 11, 2017

We are disheartened and disappointed that Congress is moving major legislation to floor votes without adequate time for thorough review and analysis. When legislation reforming both our tax code and the landscape of postsecondary education in our country is rushed, not only are Congressional members prevented from thoroughly reviewing legislation before being required to vote on it, but associations representing the interests of citizens and students are kept from contributing the voices of their members. Even in instances, such as the simplification of federal student aid, where the goals of legislators align with those of higher education advocates, unnecessarily accelerated timelines shut out commentary and contributions from those who are frequently in positions to identify where the intent of legislation may not be met by the solutions proscribed in the text. Nonetheless, even though we have had insufficient time to explore and analyze the impacts of either the tax bills or the proposed H.R. 4508, “Promoting Real Opportunity, Success, and Prosperity through Education Reform Act” (PROSPER Act) HEA reauthorization bill, we would be remiss not to identify some of the most immediately harmful provisions in each for our students and the future of higher education.

In the House tax bill, the repeal of the Lifetime Learning Credit (LLC), the Student Loan Interest Deduction (SLID) (Sec. 1204), the qualified tuition reduction (Sec. 117(d)), and educational assistance programs (Sec. 127) will adversely affect not only the ability of individuals to attend and complete postsecondary education, but will also diminish our competitiveness as a nation in the global economy. While the American Opportunity Tax Credit (AOTC) (Sec. 1002) is expanded slightly, it does not offset the loss of other tax credits provided under the current tax code. When combined with provisions in the PROSPER Act that removes the in-school subsidy on student loans and eliminate the Supplemental Educational Opportunity Grant (SEOG) and Teacher Education Assistance for College and Higher Education (TEACH) grant programs, these challenges are exacerbated. As noted in a letter submitted by American Council on Education (ACE), an undergraduate student who borrows $19,000 over four years and makes all payments on-time would see a 44% increase in the cost of the loan. A student who attends for five years and borrows $23,000 would see a 56% increase. As recent research demonstrates, only by closing educational gaps can we capitalize on the full potential of our “lost Einsteins;” removing educational tax benefits and making it harder for students from low- and middle-income families to attend college will only expand those gaps.

For the field of student affairs, which relies heavily on individuals with graduate degrees to provide guidance and support for our increasingly diverse student bodies, the impact on graduate students is even more devastating. In addition to a more expensive undergraduate degree, the changes to section 127 in the House tax bill is particularly concerning and is only made worse by removal of graduate student eligibility for Federal Work Study included in the PROSPER Act. Today’s students not only live in a vastly different world than those of previous generations, they are increasingly more likely to be first-generation, older adults with family and financial responsibilities that may include child or elder care and mortgages. To remain competitive in an knowledge economy, our country needs to ensure these students can attend and complete college; adding barriers to their success both directly by the removal of financial support and indirectly by reducing the qualified professionals who support them during their studies undermines the very future of our nation.

Finally, the continued erosion of rules and regulations designed to protect students and taxpayers is unconscionable. The removal of the 90/10 rule, which requires that for-profit institutions receive no more than 90% of their revenue from federal student aid, as well as the gainful employment and borrower defense rules restrict the ability of consumers to identify bad actors in the higher education market and to hold them accountable when fraud has occured. The elimination of the credit hour without employing other means of controlling aid distribution and ensuring delivery of quality educational programs will put students and taxpayers unnecessarily in harm's way.

While there are aspects of the PROSPER Act that we feel would be beneficial to students and taxpayers, we feel that they are overbalanced by the provisions that could be unintentionally harmful. We hope the House Education and Workforce Committee heeds requests from the higher education association community to delay the scheduled mark-up for the PROSPER Act until the text can be more fully explored and analyzed. We urge Congress to consider what is truly best for our economic strength, both now and in the future, and stop these attacks on low- and middle-income families’ ability to access and succeed in higher education.