In My Words: Tax reform plan unfairly targets universities, workers and students

In this column, Elon President Leo M. Lambert writes that the tax plan now being considered in Congress undermines private higher education. 

This column was originally published by the Raleigh News & Observer. 

By Leo M. Lambert

The tax reform legislation currently before Congress is bad for America’s college students and for higher education broadly. The higher-education community is counting on the U.S. Senate to exercise good judgment in protecting colleges and universities, which are vital to creating an educated workforce and citizenry we need to compete in the global economy. Here are five issues of particular concern to me:

​The version of the tax reform package passed by the House eliminates tax-exempt bond financing for private colleges and universities, while still advantaging public institutions with this option. Over the past 30 years, Elon University has grown from 3,200 students to nearly 7,000, adding about 1,000 jobs to the workforce, bringing great students from all 50 states and 50 nations to Elon and realizing a dramatic increase in academic stature. Growth has been good for Elon and for North Carolina’s economy, but it has only been possible because of our ability to leverage lower-cost bond financing for projects like residence halls and dining facilities.

All together, the 35 private colleges and universities of North Carolina are the state’s largest private employer. Elimination of access to tax-exempt bond financing for private campuses will make it more expensive for campuses to add new facilities and is certain to slow or stall the facilities plans for many institutions. North Carolina has been known for great higher education – both public and private – for decades; ill-considered tax policy should not be allowed to damage this aspect of our state’s reputation for excellence.

The House version of the tax bill eliminates the student loan interest deduction, placing an additional burden on students who do not come from families with the means to pay for college without borrowing. The student loan business is already a profit-maker for the federal government. This proposal sends the wrong signal at a time when more students need to attain some form of education beyond high school to be competitive in today’s workforce.

I am deeply concerned that the recently passed House bill taxes the tuition benefits provided to our employees and children of employees. Many of our workers on the lower ranges of our pay scales – and particularly our physical plant staff – can help their children through college using this benefit, and thus put their families on the paths to better lives. These excellent employees are vital to the functioning of our institutions and to our students’ lives and well-being; it would be a shame for them not to be able to access these benefits because they could not afford the taxes on them. According to the National Association of College and University Business Officers, the majority of college employees benefiting from the current tax provision are lower- and middle-income.

The House version of tax reform also takes aim squarely at graduate students who perform vital teaching and research functions on many campuses. We live in a time when advanced degrees matter more than ever. People with advanced degrees are leaders in innovation, entrepreneurship and problem-solving. Adding to the tax liability of very modestly funded graduate students is simply counterproductive to nurturing American ingenuity and creativity, the seedbed of economic growth.

Finally, the plan to tax the endowments of some private colleges and universities (but not their public counterparts) is especially ill-considered and deeply ironic. Our federal government, $20 trillion in arrears, wants to tax private colleges, which over decades and centuries, have established savings accounts to provide for student scholarships, faculty support, maintenance of facilities and other worthy purposes. At Elon, 70 percent of our endowment is directed to student scholarship aid, and growing the endowment to increase student aid remains our No. 1 fundraising priority. Taxing the endowments of universities is a bad principle and wrongheaded public policy.

The way to become a better America is to become a smarter America. Now is the time to be investing in the young minds of our nation, not retrenching on our global leadership position for world-class higher education.