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Category: Higher Education

GOP Tax Package Advances Out of Committee

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Early Wednesday morning, after more than 17 hours of debate, the House Ways and Means Committee voted to advance out of committee the legislative package containing a slew of President Trump’s top tax priorities. The panel advanced the legislation in a 26-19 party-line vote after rejecting numerous Democratic-led amendments.

The tax bill now heads to the House Budget Committee, which is tasked with combining all the portions of the Trump agenda bill into one package in advance of its consideration in the entire chamber.

The 389-page package makes the income tax rates from the Tax Cuts and Jobs Act of 2017 permanent and implements some of the president’s campaign promises, including no tax on tips or overtime through 2028 and a temporary increase of the child tax credit.

This bill also includes the Republican proposal to increase the endowment tax on some universities. Under the 2017 law, private universities with endowments of over $500,000 per student were subject to a 1.4% tax. The current GOP package creates a tiered excise tax system that would significantly increase taxes on some universities:

  • 1.4% tax for schools with endowments between $500,000 and $750,000 per student.
  • 7% tax for schools with endowments between $750,000 and $1.25 million per student.
  • 14% tax for schools with endowments between $1.25 million and $2 million per student.
  • 21% tax for schools with endowments above $2 million per student.

The bill also narrows the definition of students counted for tax calculations. International students on temporary visas and undocumented students will be excluded from the count, increasing the tax burden on institutions with large international student populations.

Crucially, the endowment tax would still only apply to private universities, although some religiously affiliated institutions will be exempt.

While voting the package out of committee is a significant step, there remains a strenuous process ahead of GOP leadership as they seek passage of the reconciliation legislation. The Ways and Means portion must be packaged together into one “big, beautiful bill” by the House Budget Committee before being voted on by the entire House, which will be difficult given concerns from different GOP factions and the razor-thin margin in the House. If the bill does manage to pass, it will be subject to potentially significant changes in the Senate, where it will also face staunch Democratic opposition.

Helpful links:

The Hill

Inside Higher Ed

 

 

GOP Reconciliation Proposals

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On Tuesday morning, the House Education & Workforce Committee will markup their proposed reconciliation language. The draft legislative text proposes sweeping changes to higher education in order to meet the reconciliation goal of saving $330 billion over ten years. It is one part of a larger GOP reconciliation bill aimed at reducing government spending to pay for the proposed extension of President Trump’s 2017 tax cuts, which are due to expire at the end of the year.

The draft text includes an overhaul of federal student loan programs, including the elimination of subsidized student loans and Grad PLUS loans, restricting Parent PLUS loans, and altering the aggregate borrowing limits.

The aggregate limit for undergraduate students would be $50,000. For graduate students in nonprofessional programs, the aggregate limit would be $100,000. For professional programs geared toward training for a specific field, like law or medicine, the limit would be $150,000.

A student or their parents, across all programs of study, could not borrow more than $200,000 in unsubsidized federal loans.

Additionally, the proposal would limit the availability of federal aid to the median cost of a specific program nationally.

The legislation would also make changes to federal Pell Grants. The text would make ineligible students who are enrolled less than half-time or whose student aid index — a calculation used by schools to determine aid eligibility — is greater than twice the maximum Pell Grant amount for that school year.

The text would also create a system of “workforce” Pell Grants to help students pay for workforce development programs. For students to be eligible, a workforce program would need to last between 8 and 15 weeks, have a completion rate of over 70 percent and have a job-placement rate of over 70 percent. The text would also condition a program’s eligibility for the grants on students’ earnings relative to the cost of the program. The legislation also proposes increasing the amount of funds appropriated to the Pell Grant program by $10.5 billion over the next three fiscal years.

Another consequential change offered in the text is the implementation of a risk-sharing program. The measure would institute required reimbursement payments by colleges and universities based on student graduation rates, earnings and failure to repay federal loans. The Education Department would calculate the reimbursement an institution would pay for a program of study by dividing federal loans among different cohorts of undergraduate and graduate students who finish their programs on time and those who do not. The repayment balance would be the total of payments students failed to make, interest waived under the income-based repayment plan and interest or principal the Education Department forgave. The department would use the risk-sharing payments to fund new grants to schools that meet certain criteria, including on price transparency and completion rates.

 

 

 

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House Education & Workforce Committee Unveils Reconciliation Language

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Republicans on the House Education & Workforce Committee on Monday proposed sweeping changes to higher education in order to meet their budget reconciliation goal of saving $330 billion over the next 10 years.

The draft legislative text will be marked up in Committee on Tuesday morning. Prior to the markup, Republican Committee Staff circulated a summary of the draft text, which is included below.

4.29 Reconciliation Bill Summary

NIH & FDA Director Nominees Advance

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Dr. Jay Bhattacharya, President Trump’s pick to lead the National Institutes of Health, was advanced by the Senate Health, Education, Labor and Pensions Committee. The Committee voted 12-11 along party lines, with all Republicans voting in favor and all Democrats voting against.

Similarly, Trump’s pick to head the Food and Drug Administration, Marty Makary, was advanced out of the committee by a 14-9 vote, with Democrats Maggie Hassan of New Hampshire and John Hickenlooper of Colorado joining all Republicans in voting to advance.

Bhattacharya and Makary will now appear for a confirmation vote before the entire Senate, with the Republican majority all but ensuring that they will be confirmed.

McMahon confirmed as Secretary of Education

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The Senate voted along party lines on Monday evening to confirm Linda McMahon as the next Secretary of Education. McMahon, a former professional wrestling executive and wealthy Republican donor, served as the administrator of the Small Business Administration in the first Trump Administration. She now leads a department that President Trump has proposed eliminating.

A former CEO of World Wrestling Entertainment and chairman of America First Action, a pro-Trump Super PAC, McMahon has been a longtime ally of President Trump. She launched two unsuccessful campaigns to represent Connecticut in the Senate and previously served on the Connecticut State Board of Education for one year. She has also served as a trustee at Sacred Heart University for over a decade.

McMahon told reporters during her confirmation process that she “wholeheartedly” agrees with President Trump’s mission to dismantle the “bureaucracy in Washington” and return education to the states. She added that her goal is to make the Education Department “operate more efficiently,” not to defund programs. Her confirmation, however, comes in the midst of an aggressive government overhaul project, led by Elon Musk, that has targeted the department and its employees. On Friday, employees in the department were given an offer of up to $25,000 if they agreed to retire or resign by the end of the day. President Trump has also told reporters that he hopes McMahon will “work herself out of a job.”

McMahon will now take over leadership of the department of over 4,200 employees in charge of sending federal money to schools, administering college financial aid, and managing federal student loans.