Universities, Companies Fight to Keep Tax-Free Tuition Assistance
December 11 2017 - 6:29AM
Dow Jones News
By Melissa Korn
Universities and companies are joining forces to lobby Congress
to keep a tax provision that allows employers to give staff as much
as $5,250 in yearly tax-free tuition help.
The tax-overhaul package passed by the Senate earlier this month
includes the provision, which has been part of U.S. tax law since
the late 1970s. The House version would require employees to pay
taxes on the benefit for the first time. Congressional leaders are
working to send a final bill to President Donald Trump by
Christmas.
Hewlett Packard Enterprise Co., Starbucks Corp. and others say
offering tax-free tuition assistance makes it easier for them to
keep and train employees.
Schools say they could lose thousands of students if the tuition
program is taxed. The nation's economic development would be
stunted if employees shy away from pricey training programs, they
say.
"It becomes a huge disincentive to take advantage of
postsecondary education and training opportunities," said Terry
Hartle, senior vice president of government and public affairs at
the American Council on Education.
The association, which represents nearly 1,800 schools and
education groups, is also part of a coalition of more than 80
schools, companies and trade associations, including Emory
University, the United Auto Workers and Texas Instruments, that is
lobbying to include the tax-free tuition benefit in the final
version of the tax bill.
Many of these same groups had been pushing to increase the
amount of tuition assistance that could be provided tax-free. The
benefit has been set at $5,250 since 1986.
Arizona State University, which is in the coalition, has been
highlighting the economic case for the program in meetings with its
local congressional delegation.
More than 9,000 Starbucks employees attend Arizona State online
through its Starbucks College Achievement Plan, launched in 2014.
The company covers full tuition for all four years of a bachelor's
degree in more than 60 subjects for employees who work an average
of at least 20 hours a week.
United Parcel Service Inc. covers up to $25,000 in college
expenses -- $5,250 a year -- for employees working at least part
time. The company said that since the program began in 1999, it has
provided more than $200 million in tuition assistance to upward of
120,000 college students. UPS said it supports the Senate language
maintaining tuition assistance.
The House bill also would tax tuition breaks that many colleges
and universities offer the families of employees including
administrators, faculty and cafeteria workers. That tax-free
benefit has gained attention because it would also apply to
graduate students whose tuition is covered by their schools.
"The janitor is collateral damage," Mr. Hartle said.
Bucknell University, in Lewisburg, Pa., spends about $4 million
a year on tuition benefits for its employees and their families.
The school covers 100% of tuition costs for employees' dependents
who attend Bucknell and provides a benefit equal to 60% of its own
tuition if the children decide to attend other institutions.
Bucknell's listed tuition for the current school year is
$53,692.
About 160 faculty and staff use the benefit to cover costs for
175 dependent children or partners. President John Bravman said an
initial analysis suggests that taxing the benefit could cost plan
participants over $600,000 in new tax liability.
On Thursday, Reps. Rodney Davis (R., Ill.) and Mike Turner (R.,
Ohio), both of whom voted for the House tax bill, circulated a
letter urging colleagues to continue to exempt the employer tuition
benefits and the tuition breaks for university employees' families
from taxation, and to allow employers to cover staffers'
student-loan payments tax-free.
The letter, signed by 24 other members of Congress, was sent to
House Ways and Means Committee Chairman Rep. Kevin Brady (R.,
Texas) and Sen. Orrin Hatch (R., Utah), chairman of the Senate
Finance Committee.
A spokeswoman from the House committee said Friday that Mr.
Brady is working "to reach a positive solution on the treatment of
tuition assistance."
Write to Melissa Korn at melissa.korn@wsj.com
(END) Dow Jones Newswires
December 11, 2017 07:14 ET (12:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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