The proposed changes to our tax codes being considered by the U.S. Congress will negatively impact our regional economic competitiveness by limiting the ability for Hoosiers to earn a college degree. As for our tax code, clearly it is time to think about better ways to manage how and why we tax. But, in the case of the current tax changes under consideration, the sweeping impact to higher education will have a devastating effect to our communities in the long term.
Higher education serves as as catalyst for positive change in workforce development, economic revitalization and bolstering our quality of life. The more people earning a college degree or credential, the more competitive our region becomes in attracting businesses, creating new ones, filling workforce needs, and supporting an informed citizenry.
At a time when our country should be making higher education more accessible and affordable, these changes threaten many benefits that fundamentally impact the ability of students to attend college. The proposal, up for a vote by the U.S. Senate as early as Friday, will cost institutions, parents, and students an additional $65 billion over the next 10 years, according to the American Council on Education.
The impact of the proposed changes on higher education will make it more costly for universities to access debt to improve learning facilities, provide funding opportunities for students and create environments of innovation. More than 12 million people benefit from student loan interest deductions each year, which the proposed legislation would eliminate. This is money that not only helps students and families pay for college but also allows for more investment to support a strong economy. Students who receive tuition waivers now face the prospect of those funds being considered as taxable income. The proposal also would tax endowments at institutions across the country that support student success. In addition, tuition reimbursement programs–a valuable tool for attracting talent and helping university employees afford college for themselves and their children–also soon could be considered taxable income.
The proposed changes ultimately will have the effect of adding to the growing $1.4 trillion in student debt that continues to weigh heavily on college graduates today. They also will have a chilling effect on enrollments, which will create a long-term decline in our state’s talent base for the future.
The University of Indianapolis has a proud tradition of welcoming first-generation college students (about 40 percent of total enrollment each year). More than 86 percent of our alumni choose to live in Indiana, and our University offers more than $48 million dollars of its own money to help talented students earn a college degree. All of the other institutions of higher education in our state provide similar benefits to the region.
The proposal before Congress also will have consequences for our regional economic development well into the future. Indiana has a long-standing commitment to bolstering the intellectual capital in our state. We are recognized as a state that incubates technological innovations, attracts new business, and provides one of the most enviable standards of living in the country. These proposed changes will increase the chances that we will lose our economic momentum and slow the advances we have made in preparing a 21st Century workforce. These are the core engines of success in Indiana, and any future changes to the tax code should be mindful of the important role higher education plays in safeguarding them.
Robert L. Manuel
University of Indianapolis President
Director of Communication