By Mary Beth Labate
President, Commission on Independent Colleges and Universities
The tax reform proposal released this week by the U.S. Senate improves on the House’s version. Still, many more changes need to be made to fully support New Yorkers pursuing higher education.
We applaud the Senate for preserving important tax benefits for everyday New Yorkers. Preserving tax deductibility for student loan interest and higher education savings options and keeping tuition remission and employer-based tuition benefits tax-free are all in our common interest. After all, college graduates volunteer more, are employed at higher rates and contribute to our overall wellbeing as a nation. It was also gratifying to see the Senate proposal hold harmless private activity bonds, which are a critical source of capital funding for colleges and universities. Dollars raised through tax-exempt borrowing are turned into construction jobs that benefit students and communities.
The House’s extreme proposal erased these critical tax benefits for ordinary New Yorkers, a prospect that would dash the college dreams of thousands of students and families.
Regrettably the Senate and House plans both take aim at the ability of private colleges and universities to provide student aid. The proposed tax on certain private college endowments is counterproductive and would harm students and families. Endowments are a stable source of funding, used for student aid, to attract and retain world-class faculty and to fund construction projects and groundbreaking research. This proposed tax would hurt college affordability for students who need it most and make it more difficult for colleges to perform the research and make the investments that will help New York create the economy of tomorrow.
The proposed tax on endowments only applies to private, not-for-profit colleges and universities. These institutions educate almost 300,000 New Yorkers and provided $5.4 billion in student aid 2015-16. They are working hard to improve college access and affordability for everyone; the federal government should be working toward the same goal. At the very least, the federal government should commit to doing no harm to students and families in their tax proposal.
With campuses in every corner of the state and nearly 300,000 New Yorkers among our students, New York’s private, not-for-profit colleges and universities are also gravely concerned about the Senate’s proposed complete elimination of the State and Local Tax deductibility (SALT). Eliminating this important tax deduction will drive up costs for New York’s families, making it harder for them to save for college and more difficult for colleges and universities to compete for top-tier talent.
New York’s representatives in Washington must put the interests of their constituents ahead of the political calculus that is driving harmful tax and higher education policies. Higher education offers a critically important path to economic and social mobility, and we should do all we can to pave the way.
Mary Beth Labate is the president of the Commission on Independent Colleges and Universities, an association that represents the public policy interests of more than 100 private, not-for-profit colleges and universities in New York.