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Kansas community colleges raise concerns about GOP federal tax overhaul

Wichita — Community college officials in Kansas have begun sounding alarm bells about the potential impact of federal tax changes now being considered in Congress.

Daniel Barwick, president of Independence Community College in southeast Kansas, told the Kansas Board of Regents Wednesday that several parts of the bill being considered in the U.S. House could be devastating for higher education, and especially for community colleges.

"While tax reform is desirable, the country cannot afford to make financing community colleges more difficult," Barwick said, noting that by some estimates, the bill being considered in the House would add $65 billion nationally to the cost of college education over the next decade.

Barwick is co-chairman of the System Council of Presidents, an advisory group to the Board of Regents that includes the chief officers of the six state universities, Washburn University in Topeka and a number of the state's community and technical colleges.

That council urged the 10-member Board of Regents to use its influence with Kansas' congressional delegation to make major changes to the bill. In particular, the council singled out 2nd District Rep. Lynn Jenkins, R-Topeka, who is a member of the House tax-writing committee, and Republican Sen. Pat Roberts, a member of the Senate Finance Committee.

"Our national associations, the American Association of Community Colleges and the Association of Community College Trustees, have jointly urged both houses of Congress to rethink and reject the dramatic change (called for in the bill) and we hope you will be weighing in as well," Barwick said.

Barwick outlined several provisions of the House bill that community colleges find troubling. Among them were:

Employer educational assistance and qualified tuition reductions: Most higher education institutions today offer free or reduced tuition to their employees and their families, as well as to graduate teaching assistants. Under current law, they can provide up to $5,250 a year as a tax-free benefit, but the House bill would make those benefits taxable, meaning that those who take advantage of those benefits would have to pay taxes on them, just as if they were part of the person's income.

Student loan interest deduction: Currently, people can deduct up to $2,500 a year in interest paid on student loans. That would be eliminated under the House bill, something Barwick said would increase the cost of student loans by $24 billion over the next 10 years.

Charitable contributions: The House bill would double the size of standard deductions, taking away the incentive for many people, especially middle-income earners, to make charitable contributions because they would no longer have a need to itemize their deductions. He said that would reduce charitable giving in the United States by as much as $13 billion a year, something that would affect all charities, not just higher education. He called for a universal deduction for charitable giving that would apply to all taxpayers, whether they itemize or not.

And changes in tuition tax credits: According to a summary of the bill on Congress' official website, the House bill would replace the Hope Scholarship and Lifetime Learning tax credits, as well as the tax deduction for tuition and qualified expenses, with a new American Opportunity Tax Credit. That would allow a 100 percent tax credit for the first $2,000 of certain higher education expenses, and a 25 percent tax credit for the next $2,000 of such expenses, according to the summary.

Barwick, however, said the net effect would be a much smaller tax benefit for many students, particularly older, nontraditional students who are going back to college to get additional training for their jobs.

In an email, Rep. Jenkins' spokesman, Michael Byerly, said Jenkins has been in contact with higher education officials and believes most of their concerns will be ironed out in the legislative process.

“She has expressed some of their concerns with Chairman (Kevin) Brady (R-Texas) and her Senate colleagues and will continue to do so as tax reform makes its way through Congress," Byerly said. "She remains confident that many of these issues will be resolved and by the time this bill is signed into law it will be greatly beneficial to hardworking Kansans’ bank accounts and the Kansas economy.”

Sen. Roberts' spokeswoman, Sarah Little, noted in an email that there are significant differences between the House and Senate tax bills. For example, she said free tuition would remain a tax-free benefit for most people under the Senate bill, and the Senate bill makes no changes to existing tuition tax credits.

Regarding charitable donations, she said, "Filers who donate significant amounts to Universities and charities will likely not take a standard deduction. But for the rest of lower income donors, doubling the deduction will put more money in their pockets to give to causes they care about."

The House is expected to vote on its version of the bill Thursday. The Senate bill, which is already encountering some Republican opposition, likely will not come up for a vote until December at the earliest.

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