President Hunter Rawlings last week urged
congressional support for a tax bill passed by the
U.S. Senate that would provide more than $32 billion in
education-related tax breaks.
In a letter sent to all members of the New York State Congressional delegation dated July 8, Rawlings said that, while Cornell endorses provisions in both U.S. House- and Senate-approved bills to give a tax credit to families with children in college, tax deductions for college tuition, creation of educational savings accounts and penalty-free IRA withdrawals, the Senate bill provides greater support to students, faculty and staff at higher education institutions.
Earlier, Rawlings wrote to all members of the state congressional delegation to voice his concern over the tax plan approved by the House Ways and Means Committee and later by the full House of Representatives. Rawlings wrote on June 17 that while the House plan included such worthy reforms as the Hope Scholarship tax credit and other inducements for savings, it would adversely impact many segments of the higher education community.
The House plan would provide about $31 billion in tax breaks to help people pay for college, far less than the $40 billion in President Clinton's proposal and less than the $32 billion in the Senate plan. The Republican-sponsored House package also contained several provisions that would impose costly new taxes on college employees.
The Senate measure, approved June 27, includes a $1,500 tax credit to help families pay for tuition, a tax deduction for interest paid on student loans and a tax exemption on tuition payments made for workers by their employers.
In his letter urging support of the Senate bill in upcoming House-Senate conference committee deliberations, Rawlings wrote:
"First, we urge that you support the Senate provision that would permanently extend the tax-free status of employer-provided tuition assistance to both undergraduate and graduate students as promulgated under Section 127 of the tax code. In a time of constant re-training needs and breakneck technological change, this provision will encourage the American workforce to take full advantage of employer-provided educational programs.
"Second, we ask that you champion the Senate plan to repeal the $150 million limit on tax-exempt bonding (Section 501c[3]) for universities and other select tax-exempt organizations. This will enable and empower private colleges, universities and certain health facilities to secure bonding for capital projects such as research laboratories and libraries -- facilities that fuel the nation's research, educational and technological advancement.
"Third, we request your full backing of the Senate provisions that 'carve out' from the managed care plans the direct graduate medical education (DGME), indirect medical education (IME) and the disproportionate share (DSH) payments. In addition, as advanced in the Senate bill, we seek to retain the current Graduate Medical Education (GME) Demonstration Project with no reduction in support levels.
"Fourth, your support is essential in continuing the tax-free status of remitted tuition extended to graduate students who are employed as teaching and research assistants, as included in the Senate language. Graduate students already are taxed on their stipends; to impose an added burden of taxing their waived tuition would place harsh financial demands upon individuals whose living budgets already are stretched thin.
"Fifth, your support for the deductibility of student loan interest would help ease the burden during those crucial early years after graduation when debt is high, income is relatively low, and students are just establishing their careers. The Senate bill sensibly allows for this interest to be deducted by those now out of school who fall in the lower and middle income ranges.
"Sixth, the Senate bill includes, and we strongly support, the retention of current law which does not tax the remitted tuition for university employees and their immediate families.
"Last, we urge you to continue the tax exemption for TIAA-CREF, which provides pension income for the majority of our -- and the nation's -- faculty and staff."
The House measure would end tax exemptions for TIAA-CREF, making college and university retirees and prospective retirees the only group in the country to have their retirement savings reduced by the proposed tax package. It also would end tax exemptions for tuition waivers for graduate students and for higher education employees and their families whose tuition is paid by their institution.