In December of last year, House and Senate Republicans passed the final version of the Tax Cuts and Jobs Act. When the House originally produced their version of the bill, it was met with much controversy. As a result, the Senate made many revisions. Before the Senate made these revisions, President Bill Greer had sent out an email with concerns for some of the policies on education, requesting that members of the Milligan community take action by contacting their representatives.
The email stated that the bill would harm higher education and provided these examples: new excise taxes on college endowments and elimination of colleges’ access to tax-free funding, of itemized deductions and of the estate tax. An attached document cited three particular programs currently in place that, if repealed, would have affected students: the deduction for interest on tuition loans, the Hope Scholarship Tax Credit and the Lifelong Learning Credit.
Under the TCJA, individuals are still allowed to deduct up to $2,500 per year on the interest paid on student loans; however, this benefit phases out as one’s income goes up. Tuition waivers for graduate students have remained in place, so students will not have to include them as taxable income. Tuition assistance from employers also remain non-taxable. Itemized deductions were not eliminated and the limit for charitable contributions was increased from 50 percent to 60 percent of one’s adjusted growth income. Neither the Hope Scholarship Tax Credit nor the Lifelong Learning Credit were repealed.
The excise taxes on college endowments remained in the final bill. According to “U.S. News and World Report,” Milligan College’s endowment in 2016 was $28.7 million. However, the stipulation added to the bill means that only schools with an endowment worth more than $250,000 per student will be affected. Milligan’s endowment is less than this, so it will remain unaffected.
“The Wall Street Journal” states that the Congressional Budget Office has determined the TCJA will add $1.4467 trillion to the federal deficit. As a result the new spending bill is higher than usual. According to PBS NewsHour correspondent Lisa Desjardins, this is “one of the largest spending increases” in years.
Most taxpayers will not be affected until they file their tax returns in 2019. Additionally, students may not realize that the pay from their work-study jobs is taxable income and may be eligible for a refund. The last date to file taxes is April 17.