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I’m a grad student. Here’s how the GOP tax bill makes student loans even more expensive.

The bill will discourage people from pursuing higher education.

Activists protest the GOP tax reform bill on December 5, 2017, in Washington, DC.
Drew Angerer/Getty Images

When I graduate this May from Yale, it will be with two master’s degrees, a lot of pride, and about $200,000 in student debt.

After working for the state government and a solar company while living amid the San Francisco Bay Area’s housing boom, I didn’t have a ton of savings to draw on when I went back to school. Nor could my family afford to foot the bill for three years of Ivy League graduate school. Still, I was passionate about the environment and renewable energy’s potential to alleviate its stress, so I figured the foundation graduate school would lay for my career would be well worth the student loan burden.

It’s a calculation I still stand by, as my years at Yale have already been tremendously rewarding. I’ve gotten everything I could possibly want out of my education, and feel well positioned to be a force for good after school.

That said, $200,000 of debt is a hefty sum when contemplating a career focused on creating public rather than personal value. If I pay this back over 30 years, at my average loan rate of 6 percent, I’ll pay about $230,000 in interest over the life of the loans.

This makes the student loan provisions of the GOP tax plan particularly painful. The House version of the plan makes several changes to the tax code aimed at generating revenue by raising rates on higher education. I’ll admit that complaining about the education taxes aimed at the wealthy  —  such as the plan to institute an excise tax on endowment fund managers paid in excess of $1 million a year  —  is unsympathetic. However, one of the tax reforms directly targets graduate students, a population not known for excess wealth.

When universities waive graduate student tuition in exchange for teaching or research services, this waiver would become taxable. Under the new plan, a student making $20,000 from her teaching services at a $60,000-a-year university would be taxed as if she took home $80,000-a-year in income. Not only does this revision increase a student’s tax basis, but in our example it also bumps the student into a new tax bracket  — meaning that what she owes goes  from 12 percent to 25 percent. In short, our student whose $20,000 teaching stipend would have generated about $2,400 in taxes would now be facing a much heavier income tax burden of more than $14,000.

Adding to the cost of education is a proposed elimination of the student loan interest deduction, which affects all students using loans to cover their tuition.

Obviously, this plan makes higher education a greater economic burden and further out of reach for average American families. It’s a strange plan for a country that is beginning to show signs of losing its competitive edge in higher education, but recent changes in public opinion suggest this is just the GOP continuing to play to its base.

A recent Pew study found that 58 percent of Republicans said colleges and universities have a negative impact on society. Jason Delisle of the conservative American Enterprise Institute may have summed up Republican legislators’ thinking on higher education recently while speaking with Politico: “Very few Americans care. … 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.”

As we enter the House-Senate reconciliation phase of tax reform, I call on our legislators to question this assumption. While polls indicate a lack of concern for education, the economy remained the highest-priority issue for Americans in the 2016 election. Students pursuing graduate education go on to conduct the research, develop the technologies, and found the companies that create new jobs and keep the US economy competitive amid increasing international competition.

Moreover, an increasing number of graduate students are emphasizing social impact alongside economic rewards when choosing where to work after school. Students who graduated from my program last year have founded ventures focused on healthy, affordable frozen meals, college preparedness in inner cities, and carbon footprint management software for energy consumers.

Meanwhile, the percentage of graduate students taking out more than $40,000 in loans to pay for their studies increased from 14 percent in 2004 to 47 percent in 2012. Education has become more expensive, and those of us taking out loans do so because our families don’t have tens or hundreds of thousands of dollars to finance our education. So it’s foolish to conclude that by cutting interest payment deductions and taxing tuition waivers, the GOP tax plan is redistributing wealth from an out-of-touch elite. In fact, it’s taxing the nation’s future entrepreneurs, educators, and scientists, who are increasingly focused on societal benefits but can’t afford to pay for their education out of pocket.

More broadly, our legislators should bear in mind the long-term effects of discouraging Americans from pursuing higher education. This tax reform effort comes at a time when we’re making it significantly more difficult for those educated abroad to immigrate to the US and we’re considering new tariffs on imported technology and manufacturing materials. Taken in concert, these policies invite the question: If we aren’t educating Americans so that they’re prepared to innovate, won’t let in the people who are, and are discouraging new technology imports, how are we going to grow the economy?

This article is adapted from an essay originally published on Medium.

Kristofer Holz is a joint MBA/MEM candidate at the Yale School of Management and the School of Forestry and Environmental Studies, focusing on financial and policy innovation in the energy sector. Prior to Yale, he worked in natural gas regulation for the California Public Utilities Commission and solar development for SunEdison.


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