What the new tax plan means for college students
New tax plans always have at least one thing in common: They can’t make everyone happy. The new tax plan proposed by the GOP is no different. Proponents say the bill will help out the middle class, and naysayers believe it will only help the rich. The bill promises corporate tax cuts, new tax brackets and a general overhaul of U.S. tax code. Not all of this sounds bad, but what exactly does this bill mean for students like you and me?
One of the biggest things that we, as college students, have to worry about is repaying our student loans. Nowadays, it is virtually impossible to graduate debt free. This even holds true for many of our professors who have likely accumulated their fair share of loans over their many years of schooling. The new tax plan eliminates the student loan interest deduction that many of us could benefit from.
This is a deduction that more than 12 million people used in 2015, according to the The New York Times. That is $625 a year taken out of students' pockets. So while this tax plan is good for many middle-class earners and definitely good for corporations and the wealthy, college students will take a hit. Maybe that $625 isn’t a huge deal breaker, but there are many other ways this new tax plan could make higher education virtually unattainable for many people.
Disproportionately affecting students and their parents one step further, college employment benefits will also be taxed as income. This means that employees of Grand Valley State University, or other institutions, who receive a reduced tuition rate will be taxed heavily for it. This would be a dramatic increase given that tuition is often in the tens of thousands of dollars. What was once viewed as a benefit and encouragement of education will now become a penalty.
This same penalty will exist for those of us who decide to pursue education beyond a bachelor’s degree. Anyone who wishes to go to graduate school could see their taxes rise by roughly 400 percent, according to CNBC. This is a result of the taxation of tuition stipends that many graduate students receive. Though they are already taxed on their living stipends, an additional taxation of their tuition costs could lead to them being taxed as if they’re making $80,000 a year when in reality their living stipend is only $30,000, according to CNBC.
Furthermore, those of you who either chose not to or were unable to end schooling within four years will also be missing out on the Lifetime Learning Credit. As a long-term student, you can currently get $2,000 a year under this credit, but it is completely eliminated under this new tax plan. A couple thousand dollars is no small chunk of change for a college student, either.
Aside from the schooling side, college students are also likely to be affected by the debt this tax plan may produce. We’re talking $1.7 trillion in just the next decade, according to The Huffington Post. From here, it is possible that future taxes will only go up higher than they are at this moment in order to account for our drastic debt.
All in all, this new tax plan proposes a large hazard to students of higher education. In this arrangement, education is a disadvantage rather than a gift. In today’s society, a college degree is almost necessary for employment, so why are we paying more taxes just to be able to work?