After the senate's first sweeping tax legislature in over 30 years passed on Dec. 20, 2017, Longwood University Vice President for Administration and Finance Ken Copeland called the new bill “a long time coming."
The bill passed 51-48 with Vice President Mike Pence casting the deciding vote, according to CNN Politics.
“There’s not a lot of bad news,” said Copeland. “None of those things that are beneficial to students and their families have been taken away so that’s really the big story.”
Vice President for Administration and Finance Ken Copeland discussed the impact of the tax bill.
Copeland said the major changes college students and their families could see focused the 529 plan and the tax deductibility of student loan interest, while institutions could see changes with endowments.
The Lifetime Learning Credit, a credit for up to $2,000 per year for tuition for students if their modified adjusted gross income is $65,000 or less, and the Hope Scholarship Tax Credit, an education tax benefit allowing taxpayers a credit of up to $2,500 a year per student if they paid qualified tuition for the first four years of post-secondary education, are both still intact with the bill, according to the Internal Revenue Service (IRS).
A 529 is a tax exempt savings plan “designed to encourage saving for future college costs,” according to the U.S. Securities and Exchange Commission.
According to Copeland, the bill now allows 529 plans to be used for K-12 education as well as college. Families can use up to $10,000 a year from the account for kindergarten through high school.
“Not to practice bipartisan politics, there are a lot of people saying that the threshold being increased is giving a greater tax deduction to the wealthy,” he said.
An endowment “allows an institution to make commitments far into the future, knowing that resources to meet those commitments will continue to be available.” Institutions with the largest endowments include mainly Ivy League Schools such as Harvard University and Yale University but can extend to state schools like the University of Virginia, according to Copeland.
With the tax bill, endowments exceeding over $500,000 per student will include a 1.4 percent excise tax, according to Copeland.
According to the IRS, an excise tax is paid when purchases are made on a specific good typically already included in the price of the product.
“You’re sending the message to the potential donor, 'Don’t give to them because a portion of what you give is going to be pulled out for income tax.' So there’s some fear that with this legislation being passed that it would stop (the) philanthropic process,” he said.
The standard deduction increased as a result of the bill to $12,000 from $6,350 and for married couples it increased to $24,000 from $12,700, according to CNN Money.
“There’s a lot of things in the way the legislation is written that are at least, at first blush, they are taxpayer friendly,” said Copeland.
Copeland and Cathryn B. Mobley, the associate vice president for administration and finance, consulted the passing of the bill two weeks ago with KPNG, a tax and advisory service to Longwood, to “make sure that we as an institution weren’t missing something that we need to do."
Longwood hasn't relayed any information to students but is “paying attention,” according to Copeland.
“We have talked about it at the cabinet level, but we really didn’t see the need because of the lack of change," he said. "That said, we are always happy to have that conversation."
Vice President Mike Pence was present in senate to preside over the tax bill passed on Dec. 20, 2017.
