Rep. Faso Supports Maintaining College Affordability Tax Benefits

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Washington, December 13, 2017 | comments

Washington, D.C. - Congressman John Faso (R-Kinderhook) signed two letters sent to the tax reform conferees in support of maintaining tax benefits designed to make college more affordable.

“Pursuing higher education has long been considered a path toward achieving the American dream,” said Faso. “We should promote and support access for those who want to continue their studies, whether at a traditional four-year college, in graduate school, or through a technical education. By maintaining these tax benefits, we can continue to provide students help in pursuing their dreams and becoming prepared to succeed in the workforce.”

You can find signed copies of both letters here & here.

The text of both letters is copy and pasted below:

Dear Chairman Brady and Chairman Hatch,

We commend your efforts to create a tax system that will benefit middle-income families throughout our districts by allowing them to keep more of what they earn. Your focus on lowering rates and doubling the standard deduction will change their lives for the better.

As Members of Congress, we can make an even bigger impact by taking this opportunity to address access to higher education and confront the impending student debt crisis. We urge you to include in the final tax plan two important education provisions which were maintained in the Senate proposal.

First, we request that you maintain Section 117(d) of the Internal Revenue Code (IRC), which enables taxpayers to exclude qualified tuition reductions from income. If repealed, this would raise the barrier of entry to college for many individuals. Colleges and universities throughout our districts provide employees – as well as their spouses and dependents – and graduate students with tuition reductions. If this section is not maintained, an unnecessary burden will be placed on taxpayers whose only ability to attend college or university is through receipt of qualified tuition reductions. We appreciated Chairman Brady’s commitment to address this issue during a colloquy on the House floor, and look forward to working with you to preserve this important provision.

Second, we urge you to maintain Section 127 of the IRC, which incentivizes employees to accept tax-free qualified educational assistance from employers as a means to further the employees’ education and obtain skills to thrive in the workforce.  Furthermore, this benefit should be expanded to include employees who have already accumulated student loan debt, as proposed in H.R. 795, the Employer Participation in Student Loan Assistance Act. Seven in ten college seniors graduate with student loan debt – which now represents the second highest form of consumer debt. This debt harms our economy because it prevents many young adults from buying a house, purchasing a car, or saving for retirement.

Thank you again for your work on comprehensive tax reform and for your consideration of these important educational benefits. We look forward to working with you and our colleagues to establish a tax system that provides our constituents with the greatest opportunity to succeed.

Sincerely,

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Dear Chairman Brady and Chairman Hatch:

Thank you for your leadership in advancing comprehensive tax reform through both chambers of Congress. As the conference committee begins to negotiate the differences between the two bills, we respectfully request the conference report maintain the education tax provisions outlined in this letter. Thank you in advance for your consideration of our views.

Qualified Tuition Reductions

26 U.S.C. §117(d) enables colleges and universities to discount tuition for their employees and families for undergraduate education with the discount excluded from taxable income. This provisions benefits a range of employees including administrative, maintenance and janitorial staff. The vast majority of individuals who benefit from these reductions are middle-to-low income. In fact, 50 percent earned less than $50,000 and 78 percent earned less than $75,000. For some middle-income families, the tax exempt tuition reduction is the determining factor in their children’s ability to pursue higher education at all. Given all the benefits to the economy of having a college degree, we should not disincentivize any individual from pursuing higher education by increasing their tax burden.

26 U.S.C. §117(d)(5) enables colleges and universities to reduce tuition for graduate students who are serving as teaching and research assistants as part of their academic training without the reduction in tuition counting as taxable income for students. According to the U.S. Department of Education, 145,000 graduate students received tuition reductions and 57 percent of those are enrolled in science, technology, engineering and math (STEM) fields. Graduate students are vital to our nation’s scientific research enterprise. Ultimately, these students become the scientists and engineers that employers need to propel our economy forward. With countries such as China investing heavily in advanced technologies and developing an innovative workforce, we must continue encourage the pursuit of graduate degrees and without unworkable increases to students’ tax obligations.

Student Loan Interest Deduction

26 U.S.C. § 221 allows individuals to deduct from their taxable income an amount equal to the interest paid during the taxable year on a qualified education loan.  Individuals who earn a bachelor’s degree on average have higher incomes than high school graduates, are considerably less reliant on government services, less likely to be imprisoned and pay more in taxes than they use in government services over their lifetime. Knowing these benefits, the tax code should seek to incentivize individuals to pursue higher education. The student loan interest deduction helps make higher education more affordable and based on the most recent yearly data available, 12 million taxpayers benefited from the deduction. Eliminating this deduction adds to the debt burden and could increase the cost to borrowers by roughly $24 billion, ultimately making it more difficult to attend and finance their education.

Lifetime Learning Credit

26 U.S.C. §25A(c) allows an individual a credit against the tax imposed in an amount equal to 20 percent of the qualified tuition and related expenses paid during a taxable year, not to exceed $10,000.  The Lifetime Learning Credit is currently one of the three education tax credits available to taxpayers. Non-traditional students are the fastest growing segment of students in higher education. While an expanded American Opportunity Tax Credit is likely to benefit some students, it is unlikely to benefit graduate students, part-time students and lifelong learners who are seeking retraining. With advances in technology rapidly changing the economy and the workplace, we should maintain policies that encourage individuals to get the education they need to be competitive in the job markets of tomorrow.

Again, thank you for your consideration of our views and your leadership in advancing comprehensive tax reform. We look forward to your response and continuing to work with you.

Sincerely, 

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