There are signs public support for colleges is waning, especially among Republicans. A recent poll from Pew found 58 percent of Republicans view colleges negatively, while 72 percent of Democrats view them positively. | Pat Sullivan/AP GOP tax plan rattles higher education The proposal reflects a growing sense of colleges, universities as bastions of privilege.

Congressional Republicans’ plans to slap unprecedented new taxes on higher education have left college leaders shocked and scrambling — the latest salvo in what some observers say is a growing culture war on a higher education system seen as elitist and out of touch.

While most college leaders said they don’t believe they were targeted directly in tax reform legislation — and are rather collateral damage — they say the hit was startling, as higher education has long enjoyed bipartisan support. Higher education also is a powerful lobbying force on the Hill.


“I don’t think anybody expected this,” Tulane President Mike Fitts said. “I don’t think a month-and-a-half ago anybody expected this many and this level of changes in the support for higher education in the United States.”

In interviews with POLITICO, college presidents contended the tax proposals (H.R. 1 (115)) would be a devastating blow that would make college — especially graduate school — more expensive, and further out of reach of low- and middle-income families. That argument, however, may not go far, as polling shows many Americans are increasingly wary of colleges and universities, and are generally supportive of tax cuts.

“Very few Americans care” about the plight of colleges and especially about the problems of graduate students, said Jason Delisle at the conservative American Enterprise Institute. “Very few of them are privileged enough to get a graduate degree from an elite institution. I think they’re like, ‘Complain all you want.’ It’s just not going to resonate with Main Street America.”

Indeed, recent data shows the nation’s most elite schools have long catered mostly to the wealthy, serving relatively few low- and middle-income Americans. Dozens of colleges enroll more students from the top 1 percent of earners than the bottom 60 percent, according to data from the Equality of Opportunity Project.

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College presidents argue that’s a trend they’re working to combat — and that the proposed taxes would curtail those efforts. “I think it’s unprecedented,” Vanderbilt President Nicholas Zeppos said of the tax legislation. "It's troubling.”

But there are signs public support for colleges is waning, especially among Republicans. A recent poll from Pew found 58 percent of Republicans view colleges negatively, while 72 percent of Democrats view them positively.

The tax bills, experts say, may well be part of that sentiment. Both the House and Senate levy new taxes on the largest private college endowments. The House would end deductions for student loan interest and tax tuition waivers for graduate students.

“I think it’s part of a culture war … no question,” said Philip Altbach, a research professor and founding director of the Center for International Higher Education at Boston College. “It is part of an anti-higher education general feeling about what the role of higher education is in society and so on. I do think they should see it as a warning.”

Congress is moving rapidly as colleges work to be heard. The House passed its sweeping rewrite of the tax code earlier this month. The Senate could vote on its version as soon as this week.

Higher education lobbying groups have been writing letters to leaders of both chambers and college leaders have been making calls and writing to their members of Congress. Graduate students, especially, are writing letters and making calls as well. With the House bill passed, the focus is on the Senate.

College leaders fear the tax plan is the latest sign they are losing the battle over public perception. The proposal comes after years of rising tuition prices have led many Americans to believe college is too expensive. It also follows a year of intense scrutiny over cultural issues on campuses, including conflicts over free speech that have crystallized the view among some Republicans that colleges are pushing a liberal agenda.

“We’re being challenged on all of these fronts, and we see that reflected for example in the tax legislation,” Rice University President David Leebron said. “We’re being out-demagogued by folks who just want to talk about how wealthy we are rather than what we use those dollars for.”

Colleges and universities need to do a better job of communicating the good they do for their communities, college leaders say — citing how they advance research in medicine and other fields and, in many cases, act as major job creators. They also need to be clearer about how they use their wealth, including endowments that in some cases top $1 billion.

College leaders argue the endowments are crucial for the longevity of their institutions — but also that they are key to funding scholarships.

The leaders said they are most worried about parts of the tax proposals they argue directly affect students or make college more expensive.

At the top of the list is the House GOP’s plan to tax as income tuition that schools now waive for graduate students working as teaching or research assistants. At some schools — where the tuition breaks run upwards of $40,000 — that could more than triple students' taxable income, causing some to spend huge portions of their stipends, which are generally just around $25,000 to $30,000 a year, on massive tax bills.

College leaders argue the change will make graduate education unaffordable — at a time when the U.S. needs more students earning advanced degrees in science, technology, engineering and math fields to remain competitive globally.

“You’re just going to have fewer graduate students. You’re going to strangle the educational enterprise,” Zeppos said. “Why would you tax people — particularly when you’re falling behind in STEM areas — to get advanced training? I’m still waiting for someone to tell me that’s really going to save the budget and it’s really good public policy. That’s one I’m still scratching my head on.”

A spokeswoman for the House Ways and Means Committee said “graduate students, like all Americans, will be taxed at lower, simpler rates based on the compensation they receive — not based on the maze of costly deductions and exclusions Americans must navigate today.”

College leaders also decry the House’s plan to eliminate a student loan interest deduction, which Republicans argue is minimal compared to the larger break graduates would get from the changes in standard deduction.

House Republicans say the typical single person making $30,000 right out of college would receive more than $800 in tax relief, which they say is more than they would receive from the ability to deduct their student loan interest today.

Republicans also argue that, broadly, their plan will boost the economy and create more jobs to graduates.

The Ways and Means spokeswoman said the tax plan is aimed at making the tax code "simpler and fairer for all Americans and lowers rates at every income level.”

The plan, she said, "provides hope to millions of young Americans who are going to find better job opportunities, get bigger paychecks, and keep more of the money they earn for what matters most to them. This is especially important for young Americans who are just starting out on their own."

But college leaders say they don’t buy that type of argument.

“They’re going to get a better job? Well, prove it. Right now all they’re seeing is their deductibility on the interest on their loans is going to be added to their student indebtedness,” Louisiana State University President F. King Alexander said.

“They’re willing to throw higher education and our students under the bus to get a win on tax reform,” Alexander said.

But perhaps the most in-your-face item aimed at higher education — especially elite colleges and universities — is a plan in both the House and Senate versions that would tax private university endowment earnings. The tax would only apply to private universities with at least 500 students and endowment assets of at least $250,000 per student — between 60 and 70 schools.

“It’s a very discriminatory, ill-thought-out proposal, which actually creates distinctions that don’t make any sense at all,” said Leebron, the president of Rice, whose endowment would be taxed. “The proposal literally makes no sense, as a coherent addition to the tax code, and represents a federal intrusion into universities that I think will only have adverse consequences.”

Other college leaders who would be hit by the tax say they spend millions from their endowments each year to offer financial aid, especially to low-income students.

Vanderbilt, for instance, spends about $250 million a year on financial aid, $90 million of which comes from its endowment, Zeppos said. Seventy percent of undergraduates at Vanderbilt receive financial aid from the school, and the university has a policy that no undergraduates have to take on debt to attend. Vanderbilt’s endowment totals about $4 billion.

The endowment tax, Zeppos argued, will diminish those efforts.

“Now in effect, I’ve sent 200 scholarships to the federal government,” he said.

Those concerns, however, have so far not swayed House Republicans, who passed the tax plan with ease. A spokesman for the House education committee said the chairwoman, Virginia Foxx (R-N.C.), supports the tax plan "because pro-growth tax reform will help workers and families see a raise in their wages and more money coming into their households.

"As a result, the Republican tax reform plan will provide more Americans with more opportunities of their choosing, including continuing education," the spokesman said.

