PENN ON THE HILL: Proposed tax rebates would benefit students

While a college education is usually viewed as a long-term investment, the race to lower federal taxes for parents of college students may make the investment more worthwhile in the short-run as well. In a December 15 speech unveiling his "Middle Class Bill of Rights," President Clinton proposed permitting a tax deduction of up to $10,000 on post-secondary education for families earning less than $100,000. The deduction would be phased out at $120,000. In his address to the nation, Clinton discussed his reasons for proposing the deduction. "Just as we make mortgage interest tax deductible because we want people to own their own homes, we should make college tuition deductible because we want people to go to college," Clinton said. Clinton proposes paying for the cuts by restructuring the Departments of Energy, Housing and Urban Development, and Transportation, as well as the General Services Administration and the Office of Personnel Management. The University's Acting Budget Director Ben Hoyle praised the idea of a tax deduction for tuition. "I think anything that they can do that would make higher education more affordable -- especially in the middle class which is getting squeezed by the cost of higher education -- would be beneficial," Hoyle said. Vice President for Finance Steve Golding said that because most students' families make less than $100,000 a year, "It would be fair to expect that a significant number of Penn families would benefit from this policy." Currently, about 60 percent of students receive some form of aid or loans. Golding said he cannot envision any changes in the University's aid policy as a result of a tax deduction. He also said the University "would certainly benefit" from a bill that would give families tax deductions, as the need for aid would presumably be reduced. Hoyle noted that it is difficult to say exactly what kind of plan will be approved by Congress, if any. The Republicans, who took control of both houses of Congress after last November's election, have several tax cut proposals. Most Republicans appear to favor raising the income level at which the deduction would be phased out. Hoyle said that for now, the changes would not likely affect tuition. "I would be surprised if we have a tuition policy, at least in the short term, that's affected by these proposals in Congress right now," Hoyle said. The school can get into a "sort of rut" by raising tuition, as the need for financial aid is increased by such a move, he said. For the current academic year, the cost of tuition and mandatory fees is $18,856 for undergraduates and $19,740 for graduate students. The overall charge to undergraduates is $25,822, including room, board and expenses.