This proposal’s target are the liberal values promoted by U.S. colleges and universities. By significantly hiking the cost of education, the proposal aims to diminish liberal values among the masses.
As per an analysis by the American Council on Education (ACE), the Republicans led tax overhaul plan, which was unveiled on Thursday, will significantly increase the cost of education in the U.S. by more than $65 billion between 2018 to 2027.
Its proposals include taxing endowments of private institutions as well as bar deductions for student-loan interest payments in a move that will hurt U.S. institutions and its students.
As per ACE President Ted Mitchell the proposed plan “would discourage participation in postsecondary education, make college more expensive for those who do enroll, and undermine the financial stability of public and private, two-year and four-year colleges and universities”.
According to House Speaker Paul Ryan, the tax plan would allow the typical family of four to save around $1,182 a year, which could go toward college savings.
The Republican administrations have locked horns with U.S. colleges and universities saying these institutions force liberal values on students.
According to the National Association of College and University Business Officers (NACUBO), private college endowments total to $350 billion. The proposed levy of tax will only apply to endowments with at least $100,000 in assets for each student enrolled.
Since universities have to balance their budget, they will be forced to either cut programs or raise tuition fees as well as financial aid in order to cover the proposed new tax, said Liz Clark, NACUBO’s Federal Affairs Director.
Case in point: Of the $22 billion endowment it receives, New Jersey-based Princeton University channels a portion of it to provide aid to more than 60% of its students as well as pay for academic programs, facilities and research, said Bob Durkee, Princeton University’s vice president and secretary. Furthermore, families with incomes below $160,000 pay no tuition, at all while those with incomes less than $56,000 forgo paying room and boarding charges.
Ending the deduction of interest will significantly hurt people’s ability to afford an education, said Justin Draeger, president of the National Association of Student Financial Aid Administrators.
“For us, it’s one thing to talk about whether these funds are the most effective use of government money to help people afford college,” he said. “But it’s another to use them as an offset in an unclear tax overhaul.” said Draeger.