Trump Tax Code Causes Changes to College’s Finances

An overhaul of America’s tax system has been on the forefront of American political discussion since well before the last presidential election. It is unsurprising that Congress’ recent tax bill has illicited a flood of speculation regarding shifting incentives and their effects. For private colleges, including Dartmouth, several provisions in particular have caused worry to administrators.

Colleges with per student endowments above $500,000 will receive a new 1.4% tax on investment income. Approximately 35 colleges fall into this bucket, Dartmouth College included. The vast majority of schools affected are similar, selective institutions with high tuition costs.

Many private and public universities receive a large amount funding from donated alumni estateshe senate’s bill raises estate tax exemptions from $5,000,000 to in theory over $22,000,000. The increased exemption may threaten the large, tax exempt donations many colleges rely on.

Despite the numerous austerity measures that will reduce universities’ disposable income, tax deductions on student loan interest remain unchanged.

The continuous outcry of colleges claiming that these measures will reduce their ability to provide financial aid to lower and middle-income students illustrates a fundamentally warped view on spending. With every school in the Ivy League having an average net cost of attendance around of above $50,ooo a year, it is difficult to imagine that there is no fat to be trimmed in order to maintain affordability. Our nation’s colleges have been pressured into a cycle of competitive spending that supersedes any notion of frugality, while threatening the accessibility of education to large swaths of the population.

We neither need a system that makes it easier for students to borrow and pay for college, nor need laws that maximize the funds available to institutions of higher learning. We need a system of incentives that encourage colleges to spend with education and accessibility at the forefront.