Although most of us here in West Philadelphia are laser-focused on finals prep and holiday travel plans, it’s hard to ignore that early Saturday morning, Republicans in the Senate passed “a sweeping overhaul of the [United States] tax code, the largest change since Ronald Reagan's presidency.”
With this, most Americans will face monumental changes to their finances. It seems that there will clearly be winners and losers, but exactly who will pay more or less in taxes is still murky. Few actually have a handle on the full details of the bill, which is a complicated result of months, if not years, of horse-trading among legislators and lobbyists. If you’re interested and have time you can read the entire 479-page document here.
But one thing is clear: Parts of the bill could harshly impact university students and graduates with student loans. Unlike the Senate bill, the House bill passed a few weeks ago would shockingly eliminate many important financial support mechanisms that make higher education affordable to many American students. Not only is the ability to write off student loans threatened, but also the tax-exemption of graduate student tuition waivers. Taxing graduate tuition waivers seems especially egregious. The House bill would force graduate students to count their tuition waivers as taxable income, which at Penn can total up to $30,000 per year, despite the fact that the graduate students don’t actually ever receive a cash payment. Obviously, this would dissuade many Americans from seeking graduate degrees — a patently illogical step for any nation that wishes to stay competitive in the global economy.
It’s a bit irrelevant whether this attack on higher education is politically motivated (many Republicans are quite critical of universities, which they view as hotbeds of dangerous liberal thinking) or simply a shortsighted Washingtonian scramble for sources of cash to balance against the huge proposed tax cuts to corporations and the wealthy. It is also not fruitful to wring our hands at many lawmakers’ naivety and anti-intellectualism. What matters is that, if passed, these changes would undermine higher education and would have a negative multi-generational impact on the United States.
It’s important to recognize that American higher education is already financially inaccessible to many. As pointed out by CNBC: “America might be known as the ‘land of the free,’ but attending college in the [United States] is anything but.” We all know that Penn’s tuition is prohibitively expensive and fortunately, Penn’s endowment provides support to 47 percent of students with an average of a nearly $49,000 grant per incoming freshman who applies for financial aid. But not all private universities have the resources to be as generous. Moreover, across the United States, the average cost of one year at a public university for an in-state student is $20,090, which increases to $34,220 if you’re out-of-state.
So in order to afford a college diploma, many American students rely on loans. Significantly, this means that today, more than 44 million Americans hold a total of $1.4 trillion in student debt. This already precarious situation will inevitably become worse with the passing of the GOP tax plan, because graduate students will have less income to pay for their tuition, leading to even higher student debt.
Just consider the United States' global peers — which also represent our competition. In most European countries including Austria, France, Italy, Germany, and Sweden, students can attend university tuition-free. Intriguingly, Denmark manages to offer even more affordability. Danish students receive about $900 per month via a state program to cover living expenses while they pursue their university degrees. While not free, at under $5,000, Japanese university tuition is far more affordable than ours, and the Japanese government spends nearly $9,000 per student across schools and universities per year. Japan's investment has resulted in a highly educated population: The OECD reports that the country has the second-highest level of adult education in the world, with nearly 50 percent of citizens completing a tertiary level education. Instead of making tuition more expensive, the United States should strive to further subsidize higher education.
The United States has managed, via a complicated system of government student loans, university financial aid and a population that works hard to save money to pay for their children’s college education. And as a result, about 40 percent of Americans do have some sort of higher education. However, if one is even vaguely interested in the United States' long-term viability, one would think that Congress should reconsider undermining the affordability of an already monumentally costly system. While higher education is expensive, it should be considered a worthwhile investment in our nation’s future.
SPENCER SWANSON is a College freshman from London, studying philosophy, politics, and economics. His email address is email@example.com. “Spencer’s Space” usually appears every other Tuesday.
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