With college debt crippling students, Congress should incentivize universities to use their endowments to lower student debt, Ways and Means Republican Leader Rep. Kevin Brady (R-TX) said on “Your World” on Fox News in an interview with Neil Cavuto.
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Rep. David Joyce’s (R-OH) proposal builds on financial incentives in the Tax Cuts and Jobs Act encouraging universities to focus on lowering student debt by using endowments.
“What David Joyce is trying to do is draw universities into the solution here on student debt. You may remember in the Tax Cuts and Jobs Act, we created an endowment tax on universities. It was supposed to be – and designed to be – a strong financial incentive for colleges to focus on preventing and lowering student debt by using their ample endowments.
“Unfortunately they didn’t get the message. Instead, they focused on repealing the tax with Democrats, which is rightly criticized as a major tax break for the wealthiest institutions.
“So what David Joyce wants to do is expand on that tax, expand it to more colleges, create real pressure to keep tuition under inflation and generate dollars to pay for the student debt.
“My frustration is that we made it clear to the universities: If you bring us a plan to lower student debt, that’s one measurement, we’ll find a way to get you out from under the endowment tax. We want that endowment to go to preventing student debt. None of them took us up on that.
“I think it would be smart for universities to rethink their approach to this whole endowment tax and how they use those endowments.”
Congress should incentivize universities to use their endowments to prevent student debt up front.
“The way federal lawmakers have a role here is through our charitable deductions. We incentivize the contributions that build up those major endowments. So we have a legitimate reason to ask are those charitable contributions being used for the greater good.
“In this case, college debt is just crippling these students and, I would argue, the economy. Congress has a legitimate role to say: Here are the incentives and here’s how we want you to use the endowments to prevent the student debt up front, which I think is the right way. Don’t micromanage or tell the universities how to do it, but give them incentives to put their programs in place.”