While the Senate Republicans just passed a major tax overhaul on Friday, higher education writ at-large has been wringing its hands for weeks. Especially for colleges and universities with large minority populations, the bill would only pile on more financial obstacles.
Income tax on graduate student waivers, fewer deductions on student loans and the taxation of endowments are only some of the effects the GOP’s tax bill will have. According to experts, students at historically Black colleges and universities and other minority-serving institutions are especially vulnerable.
“In order to pay for the cuts in the Republican tax bill, there are quite a few programs on the chopping block, including some higher education programs,” Dr. Marybeth Gasman, Director of the Penn Center for Minority Serving Institutions, wrote in an email. “As many in the Republican party, including its leader Donald Trump, don’t value people of color, I worry about Minority Serving Institutions and the funding they deserve.”
According to a report published by the Center for American Progress, an older law called the Statutory Pay-As-You-Go, or PAYGO, Act, in conjunction with the GOP’s tax plan would result in the “complete elimination” of certain funds for HBCUs, Hispanic-serving institutions and tribal colleges, funds intended to help expand institutional capacity and student success. The PAYGO Act requires any legislation that increases the federal deficit to be offset by spending cuts or increases in revenue. According to a report from The New York Times, up to $255 million is at risk for higher education.
Community colleges, which serve large populations of minority and first-generation students, are resisting the tax plan. A call-to-action disseminated by the Community College League of California warned its members that the $1.5 trillion deficit that will accrue over ten years under the plan would be countered by diminishing federal funds for Pell Grants and career education, making programs crucial for underserved student populations more susceptible to elimination.
Another contentious issue is the elimination of tax deductions for students paying tuition and repaying loans.
“In my opinion, the GOP’s tax plan doesn’t support higher education because the elimination of state and local tax deductions will increase the cost of going to college, decreasing access to the affordable education community colleges provide,” said Dr. Rowena Tomaneng, president of Berkeley City College, which is a designated Hispanic Serving Institution (HSI) and an Asian American Native American Pacific Island Serving Institution (AANAPISI). Tomaneng added, “44 percent of my students receive financial aid, so this plan will impact about 5,000 students at BCC. These students will not be able to deduct taxes on their tuition and student loans.”
The bill’s elimination of the tax deduction for student loan payments may have a disproportionate impact for HBCU students. According to a 2016 report by the United Negro College Fund (UNCF) titled “Fewer Resources, More Debt,” students at HBCUs, many of whom are low-income and first-generation students, graduate with higher debt than students finishing their degrees at non-HBCUs.
The report shows that 80 percent of students attending HBCUs use federal loans compared to 55 percent of students at other universities. Data from 2012 shows that HCBU graduates borrowed on average $26,266, nearly twice the amount as their non-HBCU peers. The percentage of HBCU students borrowing over $40,000 or more is four times that of non-HBCU students.
Cohorts of HCBU graduates also have substantially lower repayment rates. According to the UNCF report, 59 percent of HBCU students repay their loans within seven years of graduation, whereas 85 percent of non-HBCU students are able to pay off their college debt within the same period.
“Policy, like the tax bills, with negative impacts on higher education overall, will undoubtedly affect HBCUs disproportionately because our institutions fulfill their mission and make their outsized impression with fewer resources,” said Lodriguez V. Murray, vice president of public policy and governmental affairs at UNCF.
That said, another financial barrier is the last thing students of color need, according to Dr. Fred Bonner, a professor of higher education at Prairie View A&M and an expert on HBCUs.
“The number one issue across diverse student populations is always financial status and the impact of finances on the educational experience,” Bonner said. He explained that cost is the most common barrier in access to education for students of color. “So now we’re at this threshold where economics and socioeconomics are a major factor. To me, that raises the concern.”
Martin Lemelle Jr., the chief operating officer of Grambling State University, said it is too early to determine the impact the GOP’s tax plan will have.
“Given the changes we’ve seen in the last hours and days, the environment is too fluid to offer a complete opinion just yet,” he wrote in an email. “We all need to continue to engage and examine the actions of our representatives.”
In a statement released on Saturday, Ted Mitchell, president of the American Council on Education, said that the the Senate bill is a significant improvement over the measures passed by the House, but he emphasized that the Senate bill still has serious defects. He highlighted the changes to local and state tax deductions as well as changes to deductions that would lower incentives for donating to nonprofits.
“As a result, we are deeply concerned that at a time when postsecondary degrees and credentials have never been more important to individuals, the economy, and our society, the tax reform proposal approved by the Senate could make college more expensive and undermine the financial stability of higher education institutions,” Mitchell said. “This is simply wrong-headed.”
In the HBCU context, the United Negro College Fund believes that supporting higher education was not the objective in designing the tax bills.
“When writing a bill as impactful as tax reform, our representatives have to make students the focal point and remember how to make systems work best for them and their education,” Murray said. “The investments we make as a nation should be student-centered first.”
Joseph Hong can be reached at firstname.lastname@example.org