Federal Tax Legislation
To the Dickinson Community:
I’d like to share with you some important information about how the federal tax bill being considered by Congress could affect students seeking higher education as well as Dickinson and other private institutions. The legislation is moving very quickly.
While the final version of the bill that will be sent to the president for signature remains uncertain, several proposals being considered in either the Senate or House versions of the bill are concerning for our students, including:
- Individuals would no longer be able to deduct interest paid on their student loans, which has historically decreased the cost of higher education for students.
- Employer-provided tuition benefits would be treated as taxable income. These credits have been vital for families to educate themselves and their children. This will also have a significant impact on any students who are looking to go on to graduate programs, where work as research or teaching assistants previously allowed this benefit.
There are also two provisions in the House version of the bill that could negatively impact Dickinson. While it remains unclear if they will be in the final version submitted to the president, it concerns us that the current proposal would:
- Increase Dickinson’s cost of borrowing for capital projects, such as a new residence hall or academic building, by eliminating tax-exempt bond financing for private colleges and universities. That provision would have added $2.1 million in debt expense to Dickinson’s 2017 bond issue, which was secured to pay for the residence hall and campus sustainability projects.
- Eliminate the ability of private institutions to re-fund bonds in the tax-exempt market, which will have an adverse effect on Dickinson’s operations. Dickinson realized $9.1 million in savings in the past two years by refinancing its bonds and had begun efforts to re-fund additional bonds in the new year, with expected savings of $2 million. Those efforts—and the savings they would produce—are now in question.
Our collective action on this can help. An earlier version of the House bill included a proposed tax on investment income from an institution’s endowment. After hearing from concerned constituents, the House agreed to amend that provision. That proposal would have significantly reduced the amount of financial aid we could offer our students.
As we work to keep tuition costs under control and secure additional funds for financial aid, these additional costs are a serious concern.
Dickinson and other higher education institutions are not sitting quietly by while this bill is considered. We have contacted our legislators directly. The American Council on Education and the National Association of Independent Colleges and Universities are working diligently on behalf of colleges and universities nationally to make certain that our representatives understand the full implication of their proposals on the future of American higher education.
I strongly urge you to learn more about the impact of this bill on students, families and private colleges and universities, and reach out promptly to your elected officials to share your concerns.
Of course, we will be closely monitoring developments as the bill works its way through Congress and will keep you updated on how you can add your voice on behalf of our students and the Dickinson community.
Margee M. Ensign