Northeastern University Statement on the Harmful Impact of H.R. 1, the Tax Cuts and Jobs Act, on Higher Education

Northeastern University opposes H.R. 1, the Tax Cuts and Jobs Act, because several provisions of the bill would make college less accessible and more expensive, while making it harder for colleges and universities to carry out their missions. As an institution, Northeastern welcomes efforts to reform the tax code in order to lessen the burdens on students and working families. As currently drafted, however, this bill would not achieve those goals.

Most importantly, we strongly oppose the elimination of the student loan interest and tuition payment deductions. These deductions are fundamental tools by which students finance and pay for college. Eliminating them would make it harder for our students to pay for college and pay off their student loans. In fact, for some students, the elimination of these deductions would make earning a college degree impossible. At a time when higher education and government should be working together to solve the student loan crisis, eliminating incentives that lessen the burden on students is harmful and unnecessary.

We are also deeply concerned about the provision of the bill that eliminates the exclusion for qualified tuition reductions for employees and graduate students of colleges and universities. This change would treat tuition reductions provided to graduate students who conduct research and teach as taxable income, making it very difficult for these students, who are essential components of our federal research infrastructure, to afford to pursue their degrees. Eliminating this benefit would make the costs of research and graduate education untenable for many universities and students alike.

In addition, as an institution focused on experiential learning and career-aligned higher education, we at Northeastern are particularly concerned about several provisions that affect non-traditional students and lifelong learners:

  1. Employer-provided Education Expenses: Eliminating the exclusion for employer-provided education expenses makes it harder for non-traditional students and lifelong learners to gain the skills they need to excel in the workforce. Working with employers to provide innovative solutions to workforce needs through education and credentialing programs is part of our DNA at Northeastern. More importantly, we believe these collaborations between higher education and industry are essential to solving the pressing workforce development and skills gap issues we face as a nation.Eliminating the exclusion for employer-provided education expenses would discourage prospective students from seeking out valuable educational programs employers from offering them. 
  2. The American Opportunity Tax Credit, the Hope Scholarship and the Lifelong Learning Credit: Non-traditional students and lifelong learners also lose out in the elimination of the Hope Scholarship Credit and the Lifetime Learning Credit. By consolidating these programs into the American Opportunity Tax Credit, non-traditional students, lifelong learners, and graduate students would no longer be eligible. While we applaud the expansion of the AOC to include a fifth year, we are disappointed that non-traditional students, graduate students, and lifelong learners will no longer be eligible for similar benefits.

We are also deeply concerned about several provisions in the bill that make it harder for higher education institutions to carry out their missions and which undermine our efforts to make high quality higher education more accessible:

  1. Taxing Endowments: The proposed tax on certain endowments is harmful and unworkable. Colleges and universities establish endowments in order to ensure that they can fulfill their missions long into the future, and so that they can continue to provide the services they do – world class teaching and research, facilities used by their communities, and of course student aid – in spite of market volatility. These endowments are made up of a complicated combination of assets, investments, and individual gifts – often with specifical legally restricted uses that sometimes extend long into the future. In many cases, these restricted gifts are themselves dedicated to student aid, and are instrumental in reducing the net cost of college. The specific endowment tax proposal in this bill would likely not affect Northeastern. Nevertheless, we oppose efforts to encroach on the endowments of tax-exempt organizations.
  2. Doubling Standard Deduction: We applaud the omission of any changes to the charitable tax deduction. However, doubling the standard deduction for individuals and couples, is likely to reduce the number of taxpayers who itemize, which would reduce the value of the charitable deduction and lead to a reduction in donations to colleges and universities. Northeastern depends on donations from our alumni and others to enable the education we provide to our students. The Joint Committee on Taxation estimates that the number of charitable donations would decrease from 41 million donors and $241 billion under current rules to 9 million donors and roughly $146 billion under the House plan.
  3. UBIT and Research Income: The bill also includes a proposal that would treat any income derived from research not made “publically available” as unrelated business income and subject to UBIT rules. The notion that research universities are profiting off of the research they conduct is a fiction. This ill-conceived proposal would do little to raise revenues, and would only discourage important research being conducting at universities across the country.

Because of these provisions that would make it harder for students and families to save and pay for college, we strongly encourage you to oppose this bill in its current form.