Faculty on the Oklahoma Christian University campus, as well as across the country, may be affected by a new House of Representative tax bill, which is set for a vote today.
This bill, if passed, will tax the value of college tuition benefits bestowed on thousands of university employees, as well as cause student loan interest to no longer be tax deductible. Graduate students will also have to pay taxes on the value of tuition.
According to the New York Times, the bill was drafted by Republicans with the promise to “simplify the nation’s tax code and cut rates for middle-income Americans.” While many families and businesses may experience tax cuts, however, many college students would see tax bills increase dramatically.
For the nearly 27,000 undergraduates and 145,000 graduate students receiving tuition waivers offered to employees by many colleges for themselves, their spouses or their children, the passing of the tax bill would treat the now non-taxed waiver as taxable income.
“And if students take out more loans to pay back their new taxes, they would face another surprise,” Eric Green of the New York Times said Thursday. “Under the House bill, interest paid on student loans—a deduction that more than 12 million people used in 2015—would no longer be tax deductible.”
According to the Head of Tax at Betterment Eric Bronnenkant, the bill would also increase tax bills at private universities where the average tuition is $35,000, by $11,295 a year. For families claiming up to $2,500 per child through the American Opportunity Tax Credit, the House will “expand eligibility to a student’s fifth year, but at a reduced benefit.”
“These benefits ensure the brightest and best in the country can continue to afford an education,” Director of Governmental Relations for the American Council on Education Steven Bloom said. “Congress is sending a clear message that they’d rather use that money for corporate tax breaks.”
According to CNN, Congress hopes to have a final bill on President Trump’s desk by the end of the year. If approved today, the tax plan could take effect Jan. 1.