Strong advocacy by the higher education community appears to have yielded positive results in the form of key tax credits and deductions for students and institutions maintained in the final bill that will likely be approved this week. In a memo to higher ed. administrators, APLU President Peter McPherson captured the work that led to the more favorable outcome; "Your level of engagement on the tax bill, coupled with that of students and others in your university communities was truly impressive and ultimately effective. Without such effort, we clearly would not have made the kind of progress we did on our priorities."

While concerns remain with the tax reform package, such as how charitable giving will fare after the standard deduction is doubled and fewer individuals opt to itemize, it is far improved from the bill that emerged from the House of Representatives last month.

Excluded from the final tax bill:

• Repeal of the exclusion for qualified tuition reductions, which many graduate teaching/research assistants rely on;
• Repeal of the exclusion for employer-provided education assistance;
• Repeal of the deduction for student loan interest;
• Repeal of the Lifetime Learning Credit;
• Treatment of university name and logo royalties as unrelated business income, subject to tax; and
• Termination of private activity bonds that are used by private universities to finance campus construction project.

Included in the final tax bill:

• Elimination of advance refunding bonds that public and private institutions use to refinance outstanding debt at lower interest rates, resulting in lower costs for capital projects;
• Computation of unrelated business income tax (UBIT) for each activity as opposed to across an institution, allowing for offsets in tax liability;
• Repeal of the deduction for 80% of donations that allow the right to purchase tickets to athletic events;
• 1.4% excise tax on the net investment income on the endowments of roughly 30 private colleges and universities, those with endowments worth at least $500,000 per full-time student; and
• Excise tax on certain compensation in excess of $1 million.

Related Resources:

Committee Summary

Joint Explanatory Statement

Committee Report

APLU Statement

Inside Higher Ed Recap

The Chronicle of Higher Education Recap