The Congressional committee action on the so called tax reform bills is causing lots of concern and resulting lobbying in the higher education community and in the state and local government tax community. Important to watch as this gets debated. The tough work now starts on committee and floor amendments over the coming weeks.
The following was written by the American Association of State Colleges and University on 11.30.17:
Senate GOP Tax Proposal
"On November 16, the Senate Finance Committee passed the Senate Republicans' version of tax cut legislation by a vote of 14—12 and released the bill's score. On Tuesday, the Senate Budget Committee reported out the tax bill, and it is currently being considered by the full Senate. As a reminder, the bill proposes to, among other things:
- Eliminate the ability to deduct state and local taxes for individual taxpayers, in contrast to the House's partial preservation of this tax deduction. AASCU has sent out action alerts on this issue and will continue to do so when necessary.
- Increase the standard deduction to $24,000 from $12,700 for joint filers (and surviving spouses); to $12,000 from $6,350 for individual filers; and to $18,000 from $9,350 for heads of households. The House bill includes the same provisions. Such a change could result in less charitable giving, including giving to institutions of higher education, due to a lack of incentive to itemize deductions.
- Unlike the House bill, the Senate proposal would not consolidate the American Opportunity Tax Credit, Hope Scholarship Credit and the Lifetime Learning Credit into one education tax credit nor would it repeal the exclusion of income resulting from the discharge of student debt in cases of death or total disability, the deduction for interest paid on student loans, the deduction for tuition and related expenses, the exclusion of interest from savings bonds used to pay education expenses, the exclusion of tuition reductions or the exclusion of employer-provided education assistance.
FAFSA and FSA Updates
The past two weeks have produced several newsworthy items with respect to the Free Application for Federal Student Aid (FAFSA) and the U.S. Department of Education's (ED) Office of Federal Student Aid's (FSA) role in supporting student aid programs and servicing Federal student loans. First, FSA Chief Operating Officer (COO) Dr. Wayne Johnson announced a Next Generation Financial Services Environment blueprint for his organization. The blueprint is designed to modernize the technological and operational aspects of FSA that support Federal student aid programs. The blueprint calls for consolidating different ED-operated student aid websites, piloting the ability of students to access Pell and loan funds above tuition and fees through an ED provided financial structure (as opposed to existing debit card arrangements with colleges and universities) and improving Federal student loan servicing. As part of this announcement, ED also unveiled a new mobile FAFSA application that would be available in the spring.
Coupled with these Administration announcements, the Senate HELP Committee held a hearing on the need to simplify the FAFSA. As part of this hearing, HELP Committee Chairman Lamar Alexander (R-TN) announced that he has been working on new legislation to simplify the FAFSA down to 15 to 25 questions. Such a proposal would be in contrast to earlier calls by Alexander to shrink the FAFSA down to 2 questions. In addition, Alexander and witnesses discussed the idea of creating an application for the Pell Grant, which would only be a few questions, separate from other types of aid."