House Budget Committee Document Outlines Revenue Options for Reconciliation

A document produced by the House Budget Committee includes a host of proposals for Congress to consider including in upcoming reconciliation legislation, many of which are problematic for higher education institutions and students. The list includes proposals that would both raise revenue and cost the federal government to implement.

While this list is a menu of options and it remains to be seen which aspects would be considered viable, it demonstrates the vast array of support students and institutions could lose in the upcoming budget reconciliation process.

Specific to higher education, the recommendations include a substantial list of tax benefits that could be eliminated to generate federal revenue, including the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit (LLC), the tax-free treatment of scholarships and grants used for tuition, and the Student Loan Interest Deduction (SLID). The list also includes increasing the endowment tax from $1.4% to 14% and additional penalties on private colleges that pay the tax. In addition, green energy tax incentives, certain tax-favored bonds, and the employee-retention tax credit are all on the list for possible elimination.

Non-tax issues that would impact higher education include many items of concern from the College Cost Reduction Act (CCRA) that was under consideration in the last Congress, including establishing risk-sharing payments for institutions of higher education and eliminating the Grad PLUS and Parent PLUS loan programs. The list also includes the savings associated with repealing the Saving on a Valuable Education (SAVE) income-driven repayment plan, limiting the Secretary of Education’s ability to promulgate new regulations, and limiting the total amount of federal student aid to the median cost of attendance by program, across all sectors. There are also estimates for rolling back tools used to forgive loans under the Biden Administration, such as for closed school discharges and borrower defense to repayment and ending the in-school student loan subsidy.

For more information, please contact:
Karin Johns