Tax reform and Higher Education Act reauthorization updates

Since NIRSA’s last update in December, a new tax reform bill has been signed into law, and the House Education and the Workforce Committee has approved a Higher Education Act reauthorization bill along party lines.

The tax reform measure fortunately does not include some of the most detrimental provisions that had been included in previous versions of the bill (such as taxing graduate student tuition waivers), but it will still impact higher education and NIRSA members’ institutions.

For example, universities with endowments over $500,000 per student now face a 1.4% excise task; college sporting event seat licenses are no longer tax deductible; getting bonds for construction will be more difficult; and increased budget pressures will negatively impact funding of higher education at the federal and state levels. For more details, see the National Association of College and University Business Officers (NACUBO)’s “Summary of key provisions of Senate and House bills.”

Regarding the Higher Education Act reauthorization, Chairwoman Virginia Foxx (R-NC) of the House Education and the Workforce Committee introduced a draft bill at the beginning of December. The draft was brought before the Committee, some Republican-backed changes were made, and the bill was recommended to the House for its consideration. Republicans voted for the bill; Democrats opposed; and the bill passed Committee.

The House is expected to take up the bill at some point in early 2017, at which time further changes may be made. The Senate is at an early stage in their process; their draft bill is not expected for a couple months and looks to be a more cooperative measure between Republicans and Democrats.

It is unclear whether the Senate, with a limited calendar due to elections in November, will have time to take up the bill, work in conference with the House to construct a bill capable of passing both chambers, and then send it to the President this year. If they do not, both chambers will have to start over again in 2019 with the swearing in of a new Congress.

For more details on the House bill, see The Chronicle of Higher Education’s overview and the full-text of the bill.