[Congressional Record Volume 144, Number 22 (Friday, March 6, 1998)]
[Senate]
[Pages S1521-S1523]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself, Mr. DeWine, Mr. Bond, Mr. Enzi, Mr. 
        Faircloth, Mr. Hatch, Mr. Helms, Mr. Roberts, Mrs. Hutchison, 
        and Mr. Smith of Oregon):
  S. 1724. A bill to amend the Internal Revenue Code of 1986 to repeal 
the information reporting requirement relating to the Hope Scholarship 
and Lifetime Learning Credits imposed on educational institutions and 
certain other trades and businesses; to the Committee on Finance.


               the higher education reporting relief act

  Ms. COLLINS. Mr. President, today I am introducing legislation, the 
Higher Education Reporting Relief Act, to reduce the burdensome 
reporting requirements imposed on educational institutions by the Hope 
Scholarship and Lifetime Learning tax credits. I am very pleased to be 
joined by my principal cosponsor, the distinguished Senator from Ohio, 
Senator DeWine, who has been a real leader in education issues. I am 
also pleased to have the Presiding Officer, Senator Gordon Smith, as 
one of my cosponsors as well as Senators Bond, Enzi, Faircloth, Hatch, 
Helms, Hutchison, and Roberts.
  Mr. President, when Congress created the Hope Scholarship and the 
Lifetime Learning Tax Credit, it, unfortunately, at the same time also 
created a very burdensome and costly reporting requirement for our 
universities, our colleges, and our proprietary schools. Beginning with 
the tax year 1998, the regulations will require schools to report to 
the IRS information on their students--including name, address, Social 
Security number, information about attendance status, program level, a 
campus contact, and the amount of qualified tuition and student aid.
  Mr. President, this is a perfect example of the law of unintended 
consequences. We have inadvertently imposed a costly burden on our 
institutions of higher education. In the words of the president of the 
University of Maine at Farmington:
  At a time when we are working to increase access and to contain 
college costs, new government reporting requirements are working 
against us. We will need to add personnel, not in support of our 
educational functions, but to comply with the new IRS regulations. This 
is not sensible and it is definitely not in the interests of the people 
we are here to serve.

  Mr. President, she said it very well. This is not sensible and it is 
not in the interests of the people that we are here to serve.
  Yet another example from my State comes from the University of Maine 
at Presque Isle, a small campus with fewer than 1,000 students. The 
President there has told me that he may well need to hire an additional 
person to oversee the data collection and reporting requirements of 
this new law. Indeed, Mr. President, analysis of these reporting 
requirements indicate that they will cost America's postsecondary 
educational institutions as much as $125 million, and that is just to 
set up the system. In addition, tens of millions of dollars will have 
to be spent each year on an ongoing basis to comply with these onerous 
new regulations.
  Mr. President, this simply does not make sense. The Collins-DeWine 
bill will repeal the provision of the Internal Revenue Code that 
requires a school to report this information for its students. Instead, 
Mr. President, we will treat these educational tax credits just the way 
we would treat any kind of tax credit. Taxpayers will be required to 
report the necessary information on their tax returns and to maintain 
records of their expenses that will support any tax credits that they 
claim.
  Mr. President, the rationale for the Hope and Lifetime Learning 
education credits is to make postsecondary education both more 
affordable and thus more accessible to lower income individuals. But in 
this case, Mr. President, what Congress is giving with one hand it is 
taking away at least in part with its regulatory hand. The cost of 
conforming to these regulatory requirements will inevitably result in 
increases in tuition, chipping away at the very benefit of these tax 
credits.
  Mr. President, the American Council on Education strongly supports 
this bill. It will help avoid a wasteful expenditure of the resources, 
the scarce resources, of America's colleges and universities.

[[Page S1522]]

  I ask unanimous consent a letter from the president of the American 
Council on Education endorsing our bill on behalf of seven national 
education associations be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                    American Council on Education,


                                      Office of the President,

                                    Washington, DC, March 5, 1998.
     Hon. Susan M. Collins,
     U.S. Senate,
     Washington, DC.
       Dear Senator Collins: The creation last year of the Hope 
     Scholarship and Lifetime Learning tax credits through the 
     Taxpayer Relief Act was met with great enthusiasm by the 
     higher education community. These education tax incentives 
     will clearly benefit students and their families. 
     Unfortunately, the creation of these tax credits has an 
     extraordinarily negative by-product: an unprecedented barrage 
     of new regulatory and record-keeping requirements for 
     colleges and universities.
       The cost of complying with the education tax provisions in 
     the Taxpayer Relief Act will be enormous. More than 15 
     million degree-seeking students currently are enrolled in 
     America's colleges and universities; we believe, based on 
     preliminary estimates, that the cost of reporting will be 
     approximately $6 to $8 per student. Note that this estimate 
     does not include the cost of collecting and reporting the 
     data on the roughly 15 million students who take continuing 
     (i.e. non-degree) courses every year. When examined on an 
     institution by institution basis, the cost is alarming. The 
     University of California at Los Angeles estimates it will 
     cost $427,000 to comply with the requirements of the new law; 
     Colorado State University estimates the cost will be 
     approximately $250,000. Unavoidably, the cost of complying 
     with these externally imposed requirements will be passed on 
     to students.
       Given the costs and burdens that will be associated with 
     implementing these important provisions, we are grateful for 
     your efforts to minimize the burden to be placed on schools 
     by introducing the ``Higher Education Reporting Relief Act.''
       The higher education community is involved in efforts to 
     minimize or eliminate the reporting burden while preserving 
     important accountability for the use of federal funds. We 
     have established a task force comprised of nine associations 
     to analyze and document the full extent of the burden that 
     these regulations pose. Led by the National Association of 
     College and University Business Officers, this task force 
     will estimate the costs associated with compliance; make 
     recommendations to alleviate the regulatory burden; and 
     assess the possible use of third-party service providers to 
     manage reporting for individual colleges and universities. 
     This group is expected to complete its work in mid-May; we 
     hope that it will be an excellent source of technical 
     assistance to you and others.
       We greatly appreciate your leadership on this issue and 
     expect that many of our campuses will contact you directly to 
     express their thanks. We look forward to working with you to 
     relieve higher education institutions from the reporting 
     requirements associated with the new education tax 
     incentives. Thank you for your attention to his issue and for 
     your consistent commitment to students and families, and to 
     American higher education.
           Sincerely
                                             Stanley O. Ikenberry,
                                                        Presdient.
       On behalf of: American Association of Community Colleges; 
     American Council on Education; Association of American 
     Universities; Association of Governing Boards of Universities 
     and Colleges; National Association of College and University 
     Business Officers; National Association of State Universities 
     and Land-Grant Colleges; National Association of Student 
     Financial Aid Administrators; The College Fund/UNCF.

  Mr. DeWINE. Mr. President, I am delighted to join Senator Collins 
today in the introduction of the Higher Education Reporting Relief Act. 
This bill, as my colleague has explained, would repeal section 605 of 
the Internal Revenue Code, thereby eliminating responsibility of 
schools to file returns to the IRS on behalf of their students.
  Now, the National Commission on the Cost of Higher Education has 
recommended that the most direct way to minimize the regulatory burden 
on colleges and universities would be to repeal the sections of law 
that impose reporting requirements.
  What is the problem? Here is the problem: Current law relating to the 
Hope Scholarship and the Lifetime Learning tax credit requires all 
colleges and universities to comply with very burdensome and costly 
regulations. Beginning with tax year 1998, schools will be expected to 
provide the IRS with information regarding its students, including the 
following: name, address, Social Security number of the students, 
whether the student was in attendance at least half-time during the 
academic period, whether the student was enrolled exclusively in a 
program leading to a graduate-level educational credential, the person 
to contact at the institution in case there are questions, the amount 
of qualified tuition and gift aid a student receives--on and on.
  The Taxpayer Relief Act of 1997 that we are amending today contained 
a provision requiring colleges, universities, and trade schools to 
begin issuing annual reports to students and to the Internal Revenue 
Service detailing the students' tuition payments in case they apply for 
the new education tax credit. Preliminary analysis shows the reporting 
requirements will cost 6,000 colleges in America more than $125 million 
to implement and tens of millions of dollars annually to maintain.
  The bill that Senator Collins and I are introducing will free 
colleges, universities, and trade schools from complying with these 
very burdensome and costly requirements. Under our bill, taxpayers will 
now simply claim the new education tax credits on their income tax 
returns as they do with other tax credits and deductions.
  Now, Mr. President, in my home State of Ohio, I have heard from many 
colleges. They have told me that the reporting requirement will place a 
significant financial and human resource burden on colleges and 
universities that will ultimately lead to an increase in the cost of 
higher education.
  Ohio institutions such as Cleveland State, Bowling Green State 
University, Shawnee State University, and North Central Technical 
College have all written me and told me these requirements place 
schools in a very difficult position, putting them between students and 
parents and the IRS, because the schools are required under the current 
law to collect information that, frankly, they would not otherwise have 
to collect. While these schools are very supportive of the Hope 
Scholarship and Lifetime Learning tax credit, the burden placed on 
universities will increase the cost of higher education, which, of 
course, reduces the benefit of the tax credit to the students.
  The bill that my colleague from Maine and I are introducing is 
commonsense legislation that will eliminate an unfunded mandate placed 
upon colleges and universities. In realistic terms, if the new 
reporting requirement is not lifted off the backs of colleges and 
universities, those schools will be forced to raise tuition costs to 
cover this unfunded mandate. In effect, students and families will not 
benefit from passage of the Hope Scholarship because the money received 
from the tax credit will be used to pay this higher tuition.
  I support the Hope Scholarship, and I am excited that students will 
be given a financial boost in their plans to attain a higher education. 
However, the Hope Scholarship and Lifetime Learning tax credit will not 
be as beneficial if it means that colleges and universities will raise 
their tuition to cover the costs of this unfunded mandate. Trying to 
pay for an unfunded mandate shifts a school's focus away from its 
primary goal, which, of course, is giving the students the best 
possible education.
  Now, similar legislation to our bill has already been introduced in 
the House of Representatives. The House bill is supported by a 
bipartisan coalition of Members of the House. In addition, Mr. 
President, the American Association of State Colleges and Universities, 
representing 425 of the largest colleges and universities in the 
country, and also the American Association of Community Colleges, 
representing 1,200 community colleges, have both endorsed this 
initiative.
  Mr. President, I conclude today by asking my colleagues to take a 
closer look at how this legislation will benefit students and families 
in this country. I invite any of my colleagues to join us today to 
cosponsor this bill. Passage of the Hope Scholarship and Lifetime 
Learning tax credit was a good beginning, but we must now assure that 
universities and colleges will not raise tuition costs simply to cover 
the costs of this unfunded mandate.
  Our bill, then, is simple. It is simple, fair legislation that will 
greatly benefit any person who wants to obtain a higher education in 
this country.
  Mr. FAIRCLOTH. Mr. President, I am pleased to be a co-sponsor of the 
Higher Education Reporting Relief Act. Last year, this body was 
instrumental in

[[Page S1523]]

providing key incentives for students who want to go to school to 
improve their lives and build job skills. The Hope Scholarship and 
Lifetime Learning tax credits, as adopted in the Taxpayer Relief Act, 
give financial assistance to young and old who want to attend a 
community college, university or trade school.
  Unfortunately, the legislation also contained a provision requiring 
these institutions to comply with burdensome reporting procedures such 
as issuing annual reports to students and the Internal Revenue Service. 
Preliminary analysis shows the reporting requirements will cost the 
6,000 institutions of higher learning in America more than $125 million 
combined to implement and tens of millions of dollars annually to 
maintain.
  The Higher Education Reporting Relief Act would repeal the Taxpayer 
Relief Act requirements that higher education institutions collect and 
report information on all eligible students to the Internal Revenue 
Service. In lieu of these extensive reporting requirements, taxpayers 
would be allowed to claim the tax credits on their income tax forms, 
similar to the way other tax deductions are now reported.
  Let's not let this tremendous accomplishment for education be 
overshadowed by burdensome paperwork. Please join Senators Collins, 
DeWine, and me in supporting the Higher Education Reporting Relief Act.
                                 ______