Tax bill reflects rift between many Republicans, higher education

WASHINGTON – Ending a tax deduction for interest paid on student loans. Raising taxes for more than 100,000 graduate students who receive tuition waivers. Imposing a levy on endowments at certain private colleges and universities.

These actions are anathema to higher education leaders across the country. Yet they all appear in the House-approved Republican tax overhaul, evidence of a growing disconnect between large segments of the GOP and colleges that, for generations, have wielded enormous clout on Capitol Hill.

“I didn’t see it coming,” said Robert Caret, chancellor of the public University System of Maryland. “Obviously, there’s a very different tenor here in Washington.”

The bill the House passed Thursday would deliver a $1.5 trillion tax cut, with benefits tilted toward corporations, business owners and wealthy families. Republicans say the cut will spur economic growth, helping families, students and schools with a simpler set of revenue rules.

“Do we want a complicated tax code that gives these small, sometimes invisible benefits to certain Americans – that by the way, a lot of Americans don’t take advantage of because they don’t know they exist?” Rep. Carlos Curbelo, R-Fla., said this month as the Ways and Means Committee considered a Democratic measure to preserve education initiatives. “Or do we want a tax code that treats everyone more fairly, that provides growth opportunities for more people, that gives every American the opportunity to rise, to thrive, to flourish? That’s the debate we’re having here.”

Outside Washington, there are signs that Republican support for higher education is ebbing.

In July, the Pew Research Center found that 58 percent of Republicans and Republican-leaning independents believe colleges and universities have a negative effect on the way things are going in the country. That was up from 37 percent two years earlier.

By contrast, a large majority of Democrats and Democratic-leaning independents – 72 percent – said this year that colleges have a positive effect.

Gallup pollsters reported a similar partisan split in August, with far fewer Republicans than Democrats expressing confidence in higher education. Many Republican skeptics described colleges as “too liberal” and complained they pushed an agenda that does not allow students to think for themselves.

Those opinions may have been shaped by debates over free speech that have erupted on campuses nationwide. Congress has scrutinized incidents in which conservatives say their views were suppressed. The Senate Judiciary Committee held a hearing in June on what it called “the assault on the First Amendment on college campuses.”

Republicans are also ever-mindful of President Donald Trump’s political base. He won the 2016 presidential election with strong support from white voters who do not have a college degree – by a margin of more than 2 to 1, according to network exit polls. White college graduates were more split, favoring Trump by a slim 3 percentage points.

Historically, higher education has drawn bipartisan support from Capitol Hill. Democrats say the House bill breaks with that tradition.

The 1.4 percent excise tax on college endowment income would raise $2.5 billion over a decade, according to the congressional Joint Committee on Taxation. Treating tuition reductions for graduate students and others as taxable income would raise $5.4 billion. Repealing the student loan interest deduction would raise $21.4 billion.

Rep. Bill Foster, D-Ill., who holds a PhD in physics from Harvard University, said he has been besieged by calls from academics upset about tax hikes on grad students. He accused Republicans of making “a desperate grab to get any source of revenue they can, for the maximum possible tax cut for the wealthy and corporations. That’s the starting and ending point for what they’re trying to do.”

Congressional Republicans can cite accomplishments this year for higher education, including a recent expansion of Pell Grants that enables students in financial need to access the federal aid year-round. Key Senate Republicans support raising the maximum grant, now $5,920 a year, to $6,020.

“I’m hopeful that we can continue building on that progress to help more students get the postsecondary education they need – whether it’s a college degree, advanced degree, trade program or certification training – to get ahead,” Sen. Roy Blunt, R-Mo., said in a statement.

Blunt, former president of Southwest Baptist University, and Sen. Lamar Alexander, Tenn., former president of the University of Tennessee, are two of Capitol Hill’s most influential Republicans on higher education. The Senate version of the tax bill does not include the tax increase on graduate students and would preserve the student loan interest deduction.

But like the House bill, it would impose a tax on investment income for private colleges with endowments worth at least $250,000 per student. That would affect about 60 to 70 schools, including the Ivy League and small liberal arts colleges.

“Extremely puzzling,” said Mary Sue Coleman, president of the Association of American Universities, which represents top research schools. “Endowments allow universities to do a lot of good in the world.”

Higher education lobbyists also worry about other provisions of the Senate bill that they fear could squeeze state funding for public higher education and deter charitable contributions.

Ted Mitchell, president of the American Council on Education, a higher education group, acknowledged that colleges and universities face political hurdles. Many low-income and working-class families, he said, feel the cost of a degree is climbing out of reach even though many schools provide significant financial aid. “It certainly does impact legislators on both sides of the aisle as they hear that from constituents,” he said. He said colleges must correct that “narrative.”

Mitchell, a former Obama administration education official, said colleges also suffer from the popular impression – misguided, he believes – that they favor liberals and suppress free speech. “The culture wars continue,” he said. “They bubble, and sometimes they boil, and we’re at a bit of a boiling moment.”

Jason Delisle, a former congressional Republican aide who is a resident fellow at the conservative American Enterprise Institute, said the optics of higher education have shifted on Capitol Hill.

A decade ago, he said, the bipartisan policy mantra was: “We have the best higher education system in the world and we’re proud of it… . The only problem: For some people, it’s a little bit out of reach and we should help them.”

Now, he said, there is more populist suspicion among many Republicans about “elite institutions” and those who benefit from them. “It’s a class warfare thing,” he said.