By Jenny Smulson, Director of Government Relations, AJCU
2019 closed with legislative successes that brought good news for Jesuit colleges and universities, particularly our students. Working with the President, Congress completed work on the Fiscal Year 2020 appropriations process and agreed to make changes in the tax code to correct or modify several tax provisions that had negatively impacted post-secondary students and institutions of higher education.
Across the board, federal education programs (from early childhood to adult learning) received increases in funding for FY2020. These increases were a result of aggressive advocacy from AJCU and many other education organizations. AJCU helped to push for top-line increases for federal education programs in general, and for greater investments in programs such as Pell Grants and Campus Based Aid. AJCU also signed onto letters to support programs that focus on teacher education and international education.
Students who attend our institutions will benefit from increases to the maximum Pell grant award; the Supplemental Educational Opportunity Grant (SEOG) program; Federal Work Study; TRIO; FIPSE; Title VI; and Teacher Quality Partnerships.
The FY2020 appropriations bill included a $1.4 billion increase for the U.S. Department of Education. While this increase represents the third largest for the Department since FY2011, federal education funding remains almost $6 billion below the 2011 level in inflation-adjusted figures. The following table shows the increase for FY2020 over FY2019:
Speaking out and speaking up makes a difference. AJCU, in collaboration with the Committee for Education Funding (CEF), sent letters to Congress at key points during the appropriations process, urging members to increase funding for federal education programs.
Congress also made changes to the tax code to correct problematic policies adopted in the Tax Cuts and Jobs Act (TCJA) of 2017 and extend expired provisions of benefit to students. AJCU joined colleagues from the higher education community to express our strong support for taking up and passing these amendments.
The following issues were resolved during the end of the year appropriations legislation that was passed by Congress and signed by President Trump in mid-December:
“Kiddie Tax”: As a result of the TCJA of 2017, scholarship money that students could use to pay for non-tuition expenses (e.g. room and board) was taxed at the estates and trust rate, which was higher than the previous marginal rate based on students’ parents’ income (which tended to be low for low-income families). As a result, low- and middle-income scholarship students were taxed at a higher rate on financial aid used to pay for non-tuition fees, negatively affecting students from lower-income families, some student athletes, and students from Gold Star families (surviving family members of fallen service members who died while serving in combat). This provision has been repealed.
Parking Tax: The TCJA adopted a provision imposing a new 21% tax on the value of employee transportation and parking benefits provided by all tax-exempt nonprofits, including colleges and universities. This tax has been repealed.
Cadillac Tax: Employer-sponsored health benefits, whose value exceeds legally specified thresholds, would have been subject to a 40% excise tax, starting in 2022. The tax has been repealed.
Tuition Deduction: The tuition deduction expired at the end of 2017. Congress has now approved an extension through December 31, 2020, allowing students or their parents to deduct up to $4,000 in eligible higher education expenses from their taxable income (college expenses from 2018 and 2019 are eligible retroactively).
In this new year, AJCU will double down on our commitment to deepening bipartisan support for federal investments in education, with a focus on those programs that clear a path for post-secondary study, including opportunities for students to be #JesuitEducated. Happy 2020!