[Congressional Record Volume 143, Number 109 (Tuesday, July 29, 1997)]
[Extensions of Remarks]
[Pages E1555-E1556]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  IN SUPPORT OF EDUCATION TAX BENEFITS

                                 ______
                                 

                       HON. JOSEPH P. KENNEDY II

                            of massachusetts

                    in the house of representatives

                         Tuesday, July 29, 1997

  Mr. KENNEDY of Massachusetts. Mr. Speaker, I rise today to highlight 
provisions of the pending tax bill that would affect higher education. 
Some of the proposals are long overdue, whereas others should never 
even have been considered.
  On July 16, I was joined by my colleagues from the Massachusetts 
delegation and representatives of higher education from Massachusetts 
at a press conference on these very issues. I was joined by Grace 
Carolyn Brown, the president of Roxbury Community College, and Jon 
Westling, the president of Boston University, both of whom do a great 
job running schools in my district. BU and RCC are just 2 of the 60 
colleges and universities in my district. Their students are among the 
190,000 I represent--more students in 1 district than in 26 States.
  I also was joined by Sam Liu, an MIT graduate student who organized a 
petition signed by 500 students opposing the elimination of section 
117(d). There was also Roger Sullivan from the Association of 
Independent Colleges and Universities of Massachusetts and Harvard 
University staffer and student Annie Burton Byrd.
  Here in the Congress, no one has done a better job of making sure the 
Tax Code works to the benefit of the education needs of our Nation than 
my colleague from Massachusetts who sits on the Ways and Means 
Committee, Richard Neal. And in the short time they have been in 
office, the Members from the 3d and 10th Districts of Massachusetts, 
Jim McGovern and Bill Delahunt, have been strong and forceful advocates 
for expanding access to higher education. I also want to thank our 
delegation's resident chemistry professor, John Olver, who now watches 
out for education on the Appropriations Committee.
  When we talk about education what we're really talking about is the 
future prosperity and security of our country. Nothing is more 
fundamental to hopes of getting a good job and pursuing a rewarding 
career than education. It's the tool that enables people to get the 
high-wage jobs of the future and grow within their current careers.
  There once was a time when higher education was a luxury that few 
could afford. Increased Federal support for loans, grants, and 
scholarships has helped open up the Ivory Tower to Americans from all 
walks of life, but today we've reached a point when the cost of this 
critical investment in the future is becoming out of reach.
  The cost of getting a college, graduate, or professional degree has 
skyrocketed just at a time when higher education is more important than 
ever to obtaining fulfilling employment. Some experts predict that 
early in the next century, 75 percent of all jobs will require some 
level of higher education.
  People of all ages understand the value of education. The fastest 
growing student population in the United States consists of people over 
40 who are returning to school to gain new skills, who understand that 
what you earn depends on what you learn.
  That being the case, why are we looking at a tax package that 
pretends to boost educational achievement but really only works for the 
wealthy? The Republican tax measure does little or nothing for the 
millions of working people who are going to school part-time while 
holding down a job and raising a family.
  The education-friendly tax provisions described in our letter to the 
conferees is designed with working people in mind. It has been endorsed 
by over 25 college and university presidents and represents real help 
for the educational ambitions of our people. We urge the tax conferees 
to include them in the final conference report.
  Here are the six provisions:
  While the Republican House and Senate bills allow a tax credit equal 
to 50 percent of tuition costs for the first 2 years of college, our 
proposal covers 100 percent of costs. And while the GOP measures offer 
no credits for tuition costs beyond the first 2 years, we support a 
credit equal to 20 percent of tuition costs in the outlying years. Our 
provision is particularly important to students at schools like Roxbury 
Community College, where 1,500 dollars' worth of additional tax 
benefits can make the difference between getting a degree and going 
without one.
  The current House bill includes no deduction for student loan 
interest while ours does.
  The Senate bill permanently extends tax exclusion for employer-
provided tuition assistance and does include graduate students but the 
House bill only extends section 127 through the year 1997 and does not 
include graduate students. The Member from the 2d Congressional 
District of Massachusetts, Mr. Neal, has worked very hard to get 
permanent extension of this crucial benefit passed, because he knows 
that if employees have to pay taxes on expensive tuition assistance, 
many will decide to go without the additional education.
  My colleague from Massachusetts, Mr. Neal, has also shown great 
leadership on trying to retain the tax exclusion of tuition benefits 
for graduate students, which the House bill repeals. This provision 
would also hurt other employees of educational institutions who get 
tuition benefits. From lay teachers at Catholic schools to grounds 
keepers at Boston University, these people would be forced to pay taxes 
on the tuition benefits they and their families receive.
  Our measure exempts from taxation any interest accrued on prepaid 
tuition accounts. It makes no sense to levy taxes on education accounts 
established with the aim of bringing tuition costs within the reach of 
working families.
  Finally, our alternative eliminates the cap on tax-exempt bonds 
issued by private nonprofit educational institutions and other 
charitable organizations. This provision is crucial to the needs of 
colleges and universities to expand their facilities for the 21st 
century.
  Mr. Speaker, I have the cover letter for the petition that Sam Liu 
organized and his statement from the press conference which I would 
like printed in the Congressional Record along with my statement.

                                           Massachusetts Institute


                                                of Technology,

                          Cambridge, Massachusetts, June 30, 1997.
     Hon. Joseph Kennedy,
     U.S. House of Representatives,
     Washington DC.
       Dear Congressman Kennedy: We, 500 MIT graduate students, 
     write to express our great shock and disappointment regarding 
     the proposed elimination of Subsection 117(d) of the internal 
     revenue code which excludes tuition from taxable income.
       A graduate teaching or research assistant who receives a 
     stipend of $1300/month and tuition waiver of $22,000/year 
     (excluding summer tuition) will expect to pay $650/month in 
     State and Federal taxes under the proposed new legislation. 
     For many students this is a 3.5 times increase in tax!
       The tuition waiver granted by MIT for graduate teaching and 
     research assistants makes graduate school a financially 
     viable opportunity for us. If tuition is now redefined as 
     taxable income, many of us will no

[[Page E1556]]

     doubt be driven out of graduate school and away from careers 
     in research and teaching.
       The proposed changes in tax code will force universities to 
     dramatically increase teaching and research assistant 
     salaries to maintain a reasonable standard of living for 
     graduate students. In turn, this could increase tuition for 
     undergraduates and dramatically increase pressures on already 
     burdened federal research programs. The proposed elimination 
     of Subsection 117(d) is a dramatic step in the wrong 
     direction.
       The new provisions will make graduate school unaffordable 
     to millions of Americans throughout the next decade. We 
     respectfully ask you to work against the new legislation 
     which eliminates Subsection 117(d) of the IRS code and to 
     support provisions which are more encouraging of graduate 
     education. The future of our nation requires it.
       We thank you for your cooperation,
           Sincerely,
         Graduate Students at the Massachusetts Institute of 
           Technology


           
                                  ____
Statement by Sam Liu, Graduate Student, the Massachusetts Institute of 
                       Technology, July 16, 1997

       My name is Sam Liu. I come from Washington Crossing, PA, 
     and I am a doctoral candidate in economics at MIT.
       The current House tax proposal would eliminate the tax 
     exempt status of tuition waivers for graduate research and 
     teaching assistants (known as RAs and TAs). There are over 
     2,700 RAs and TAs at MIT who work with faculty in teaching 
     and research and who rely on these waivers to make graduate 
     school an affordable opportunity. The elimination of Section 
     117(d) of the tax code would have grave consequences for 
     graduate students and for higher education.
       The typical MIT graduate student relies on a research or 
     teaching assistantship to pay for his or her schooling. The 
     assistantship covers the cost of tuition and pays a stipend 
     of about $1,300 per month to cover our living expenses. 
     Currently, under Section 117(d), only the stipend portion of 
     this award is taxed by federal and state income taxes. After 
     taxes, the typical stipend for an unmarried student amounts 
     to about $1,100 a month.
       If the current House tax proposal were to become law, my 
     taxes and those of my fellow graduate students would increase 
     dramatically. Our tuition waivers would be considered taxable 
     income. This means that our taxable income will increase by 
     the $22,000 cost of MIT's tuition. Instead of paying taxes on 
     $12,000 for the academic year, I would have to pay taxes on 
     $34,000. That would increase my taxes by over 300 percent. My 
     stipend would be reduced to less than $600 per month. It 
     would be virtually impossible for me to live on this small 
     amount of money. My monthly rent for a shared apartment is 
     more than $400/month. The tax proposal would leave me with 
     less than $200 a month to cover food, books and other 
     expenses. Other students have families they must take care of 
     and have even greater expenses. Many of my fellow students 
     have told me that if Section 117(d) is eliminated, they would 
     not be able to continue their graduate studies.
       If the tax proposal is passed, and if MIT were to raise our 
     stipends in order to compensate us for the huge decline in 
     our net income, the Institute would see its costs increase by 
     over $19 million annually to retain its RAs and TAs. These 
     costs would be translated into either sharp cutbacks in 
     teaching and research programs or higher tuition fees for 
     undergraduates.
       My fellow graduate students and I urge Congress to keep our 
     tuition waivers tax-free and keep Section 117(d) intact. We 
     would also like to thank Representatives Kennedy, Neal and 
     McGovern and the other members of the Massachusetts 
     delegation for their leadership and support on behalf of 
     graduate education.

     

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