The House bill would repeal the student loan interest deduction, which allows student loan borrowers who make up to $65,000 and married couples who make up to $130,000 to lower their taxable income by $2,500. This deduction allows people with student debt to save up to $625 a year. In 2015, over 12 million borrowers deducted the interest on their student loans.
Parents of college students
Parents of full-time college students are often able to receive the American Opportunity Tax Credit. The American Opportunity Tax Credit is available for married couples who earn up to $160,000 and single parents who earn up to $80,000. The credit gives these families up to $2,500 annually for every child enrolled in college. Currently, families can claim this credit for four years of a child's education.
The House plan would allow parents to claim this benefit for a student's fifth year but would decrease the value of the benefit. It also would eliminate the Lifetime Opportunity Credit which allows students who attend college for more than five years to claim an annual $2,000 benefit.
Parents saving for future college tuition payments
The proposed plan makes several changes to the ways Americans would be able to save for college.
The Tax Cuts and Jobs Act would ban people from contributing to college savings accounts called Coverdell Saving Accounts, and would convert Coverdell account into 529 plans.
Coverdell Saving Accounts allow families to deposit $2,000 per beneficiary per year. These funds can then be withdrawn tax-free if used for qualified education expenses including elementary school, secondary school and/or college. Financial planner Clint Haynes tells Time, "529 accounts can only be used for college, while the Coverdell can be used for both college and private school."
The bill also allows unborn children to be named the beneficiary of a 529 plan.
Current graduate students
The bill would increase taxes for graduate students by roughly 400 percent. Under the House GOP tax plan, tuition waivers, which allow graduate students to attend college tuition-free in exchange for working at the university, will be taxed as income.
According to the American Council on Education, roughly 145,000 graduate students receive this kind of tuition reduction.
College faculty and staff
Many colleges offer their faculty and staff tuition benefits for their children. This allows thousands of parents, like Fred Vautour, to send their kids to college. Vautour, who works for Boston College as a nighttime janitor, was able to send his five children to college thanks to the school's tuition benefits.
Under the House tax plan, benefits like these would be taxed as income, dramatically increasing the taxes of workers like Vautour.
Private colleges
The House tax plan includes a 1.4 percent excise tax on college endowments at private universities valued at $100,000 or more per full-time student. Based on 2014-15 endowment values, The National Association of Independent Colleges and Universities estimates that more than 150 institutions would be affected by this proposed tax.
