Skip to content
ADVERTISEMENT
Sign In
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Virtual Events
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
  • More
  • Sections
    • News
    • Advice
    • The Review
  • Topics
    • Data
    • Diversity, Equity, & Inclusion
    • Finance & Operations
    • International
    • Leadership & Governance
    • Teaching & Learning
    • Scholarship & Research
    • Student Success
    • Technology
    • Transitions
    • The Workplace
  • Magazine
    • Current Issue
    • Special Issues
    • Podcast: College Matters from The Chronicle
  • Newsletters
  • Virtual Events
  • Ask Chron
  • Store
    • Featured Products
    • Reports
    • Data
    • Collections
    • Back Issues
  • Jobs
    • Find a Job
    • Post a Job
    • Professional Development
    • Career Resources
    • Virtual Career Fair
    Upcoming Events:
    Hands-On Career Preparation
    An AI-Driven Work Force
    Alternative Pathways
Sign In
The Review

Tax Reform That Students, Colleges, and Our Country Can’t Afford

By Margaret Spellings November 30, 2017
Members of the Senate Budget Committee met this week to discuss the Republican tax-reform bill.
Members of the Senate Budget Committee met this week to discuss the Republican tax-reform bill.AP Photo/J. Scott Applewhite

As lawmakers in Washington work to enact the most extensive tax reform in a generation, they must be wary of unintended consequences for the nation’s colleges and universities. As president of the University of North Carolina system and a former U.S. secretary of education, under President George W. Bush, I am deeply concerned by provisions in both the House and Senate tax-reform bills that threaten our nation’s students and the institutions that serve them.

To continue reading for FREE, please sign in.

Sign In

Or subscribe now to read with unlimited access for as low as $10/month.

Don’t have an account? Sign up now.

A free account provides you access to a limited number of free articles each month, plus newsletters, job postings, salary data, and exclusive store discounts.

Sign Up

Members of the Senate Budget Committee met this week to discuss the Republican tax-reform bill.
Members of the Senate Budget Committee met this week to discuss the Republican tax-reform bill.AP Photo/J. Scott Applewhite

As lawmakers in Washington work to enact the most extensive tax reform in a generation, they must be wary of unintended consequences for the nation’s colleges and universities. As president of the University of North Carolina system and a former U.S. secretary of education, under President George W. Bush, I am deeply concerned by provisions in both the House and Senate tax-reform bills that threaten our nation’s students and the institutions that serve them.

Effective reform would enhance economic mobility and offer broader access to higher education. Instead, policy makers are considering new taxes on graduate students, new obstacles to private philanthropy, and a larger burden on college graduates already struggling to pay off student-loan debt.

At a time when our economy is demanding more education for more of our citizens, we cannot erect new barriers for the millions of Americans who need affordable higher education. I join my fellow college leaders, as well as alumni and parents across the country, in calling on our representatives to avoid a self-inflicted setback in the national effort to build a more competitive, better educated citizenry.

Some of the most damaging proposals under consideration would make it harder to raise private dollars for crucial priorities like student aid, faculty salaries, and research. The House and Senate proposals both contemplate a major change in the standard deduction that would threaten private giving to all colleges.

Raising the standard deduction without also creating a universal charitable deduction would discourage millions of households from itemizing their charitable giving and would remove a powerful incentive for philanthropy. A study by Indiana University’s Lilly Family School of Philanthropy estimates that 80 percent fewer taxpayers would itemize for charitable giving under the new law. A report by Congress’s Joint Committee on Taxation estimates a $95-billion drop — 40 percent — in charitable giving nationwide.

That’s especially worrisome for public institutions like the University of North Carolina, where private giving is an increasingly important source of funding. Our donations have grown by 28 percent since 2011. That money has allowed for continued investment in student support, financial aid, and new research, even as state funding for higher education has declined.

Per-student funding of public colleges and universities is lower today in 44 states than it was in 2008, by an average of 15 percent. To avoid damaging cuts, that shortfall must be made up, and the two largest options are tuition and philanthropy. Discouraging private giving will increase the burden on students and families.

The damage caused by those changes would be exacerbated by the proposed endowment tax, which would siphon millions in donated funds away from crucial priorities and would set a dangerous precedent of taxing nonprofit institutions — a practice that is likely to only escalate in scope and scale as lawmakers seek offsets for other cuts in the future.

An additional burden on students and families would come from an ill-considered idea to impose new costs on graduate students by treating tuition waivers as taxable income. Right now, universities waive many graduate students’ tuition, allowing them to pursue advanced studies while earning relatively small stipends. That waiver isn’t cash in the bank, but the House proposal would tax it as though it were.

ADVERTISEMENT

One estimate found that a graduate student at a public institution could see a 30- to 60-percent increase in his or her tax burden, while one at a private institution could see upward of a 240-percent tax increase. But you can’t pay taxes with a waiver. We already ask too much of our graduate students. Asking them to kick in $5.4 billion more in taxes on theoretical income over the next decade is simply unsustainable.

Graduate students are crucial in doing the core work of running research labs, gathering data, and preparing to lead the next generation of discovery and innovation. They do all of that while often caring for their families or working an outside job to make ends meet. Lawmakers recognize the vital importance of American universities’ research. Just this year, Congress gave our academic enterprises a strong vote of confidence by increasing funding to agencies like the National Institutes of Health, which rely on universities — and our graduate students — to carry out major grant-funded research projects.

Increasing taxes on those students is no one’s idea of fair and sensible tax reform. It would drive talented people away from academe. Government and private-sector companies rely on universities for critical research, and we can’t afford to undermine the country’s last great bastion of basic discovery.

Finally, ideas in the current tax-reform proposals would inflict a significant tax hike on student-loan borrowers. In 2015 more than 12 million borrowers relied on the student-loan interest deduction, which the House bill would repeal, to help manage their college debt.

ADVERTISEMENT

At a time when Congress is trying to encourage productive investments — predicting, for example, that corporate tax breaks will spur spending and growth — it is shortsighted to punish people who invest in their own skills and competitiveness. The American Council on Education estimates that taxing student-loan interest would raise the cost of those loans by $24 billion over the next decade — money that young consumers could otherwise use to buy houses, start companies, and plan for the future.

By 2020, two-thirds of the country’s jobs will require some level of education beyond high school. Our nation’s long-term health depends on more Americans’ finding a pathway to college. Anything that makes that goal harder to achieve is bad for the country, the economy, and our people. Congress’s Joint Committee on Taxation estimated the House bill would increase the cost of college by more than $71 billion over the next decade. That’s a $71-billion burden for students and families and a $71-billion obstacle to a more competitive economy.

Lawmakers must resist doing long-term damage in the name of short-term reform. We’re at risk of weakening our country’s future for the sake of today’s budget math, and that’s an equation that doesn’t add up for anyone.

Margaret Spellings is president of the University of North Carolina and a former U.S. secretary of education.

Read other items in What Colleges Need to Know About the Tax Overhaul Poised to Become Law.
We welcome your thoughts and questions about this article. Please email the editors or submit a letter for publication.
Tags
Opinion
Share
  • Twitter
  • LinkedIn
  • Facebook
  • Email
ADVERTISEMENT
ADVERTISEMENT

Related Content

Graduate Students Mobilize ‘to Stop Something That Can Ruin Us’
GOP Bill Would Force Students Who Don’t Graduate to Repay Pell Grants
How the House GOP Tax Plan Would Affect Grad Students
Senate Bill Would Impose Endowment Tax but Keep Tuition Waivers Tax-Free
How the GOP Tax Plan Could Hurt Graduate Students — and American Research
Republican Tax Proposal Gets Failing Grade From Higher-Ed Groups

More News

Graphic vector illustration of a ship with education-like embellishments being tossed on a black sea with a Kraken-esque elephant trunk ascending from the depth against a stormy red background.
Creeping concerns
Most Colleges Aren’t a Target of Trump (Yet). Here’s How Their Presidents Are Leading.
Photo-based illustration of calendars on a wall (July, August and September) with a red line marking through most of the dates
'A Creative Solution'
Facing Federal Uncertainty, Swarthmore Makes a Novel Plan: the 3-Month Budget
Marva Johnson is set to take the helm of Florida A&M University this summer.
Leadership & governance
‘Surprising': A DeSantis-Backed Lobbyist Is Tapped to Lead Florida A&M
Students and community members protest outside of Coffman Memorial Union at the University of Minnesota in Minneapolis, on Tuesday, April 23, 2024.
Campus Activism
One Year After the Encampments, Campuses Are Quieter and Quicker to Stop Protests

From The Review

Glenn Loury in Providence, R.I. on May 7, 2024.
The Review | Conversation
Glenn Loury on the ‘Barbarians at the Gates’
By Evan Goldstein, Len Gutkin
Illustration showing a valedictorian speaker who's tassel is a vintage microphone
The Review | Opinion
A Graduation Speaker Gets Canceled
By Corey Robin
Illustration showing a stack of coins and a university building falling over
The Review | Opinion
Here’s What Congress’s Endowment-Tax Plan Might Cost Your College
By Phillip Levine

Upcoming Events

Ascendium_06-10-25_Plain.png
Views on College and Alternative Pathways
Coursera_06-17-25_Plain.png
AI and Microcredentials
  • Explore Content
    • Latest News
    • Newsletters
    • Letters
    • Free Reports and Guides
    • Professional Development
    • Virtual Events
    • Chronicle Store
    • Chronicle Intelligence
    • Jobs in Higher Education
    • Post a Job
  • Know The Chronicle
    • About Us
    • Vision, Mission, Values
    • DEI at The Chronicle
    • Write for Us
    • Work at The Chronicle
    • Our Reporting Process
    • Advertise With Us
    • Brand Studio
    • Accessibility Statement
  • Account and Access
    • Manage Your Account
    • Manage Newsletters
    • Individual Subscriptions
    • Group and Institutional Access
    • Subscription & Account FAQ
  • Get Support
    • Contact Us
    • Reprints & Permissions
    • User Agreement
    • Terms and Conditions
    • Privacy Policy
    • California Privacy Policy
    • Do Not Sell My Personal Information
1255 23rd Street, N.W. Washington, D.C. 20037
© 2025 The Chronicle of Higher Education
The Chronicle of Higher Education is academe’s most trusted resource for independent journalism, career development, and forward-looking intelligence. Our readers lead, teach, learn, and innovate with insights from The Chronicle.
Follow Us
  • twitter
  • instagram
  • youtube
  • facebook
  • linkedin