The Republican tax bill released Thursday would eliminate most personal itemized deductions, including the one for interest on college student loans.
Right now, borrowers who itemize their taxes can deduct up to $2,500 in interest they pay on those loans. Congressional Republican leaders see that as a "special interest" tax break.
Student activists disagree. Zac Bears with the Public Higher Education Network of Massachusetts says the GOP tax plan lacks empathy.
“The idea of cutting student-loan tax deductions to fund tax cuts to billionaires is ridiculous,” Bears said. “Students are struggling, and this just makes the problem worse.”
The IRS reports in 2015 more than 12 million borrowers qualified for the deduction. That's about a third of the 44 million Americans paying back student loans.
As part of their tax plan, congressional Republicans also want to tax college endowments, a move that would spark a fight with higher education leaders.
House Republicans are proposing to scale back tax breaks for universities and impose at least a one percent excise tax on large college endowments.
Richard Doherty, executive director of the Association of Independent Colleges and Universities in Massachusetts, says the tax would have dire consequences for at least 16 schools in Massachusetts, including Harvard, Wellesley, Brandeis and Holy Cross.
“Financial aid would be cut,” Doherty said. “Research potentially would be cut and jobs on campus, I think, are at risk if this thing goes forward.”
The American Council on Education, which represents hundreds of colleges across the country, says the tax overhaul bill would undermine the financial stability of public and private, two-year and four-year colleges and universities, discouraging students from enrolling in college and make it more expensive for those who do enroll.
“We believe it is possible to offer tax relief to hard-working middle-class and lower-income Americans in a way that does not increase college costs and make a quality higher education less accessible,” ACE president Ted Mitchell said in a statement. “We are eager to work with Congress to enact such legislation.”
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