House Republicans considering taxes on college scholarships

As Republicans in Congress look for ways to slash spending, some legislators are floating new taxes on college scholarships, an end to student loan repayment plans and a big hike in taxes on university endowments.

The ideas affecting higher education are among many in circulation among House committees that are exploring ways to cover the cost of extending and expanding tax cuts passed in President Donald Trump’s first term.

The recommendations are evolving, and it’s unclear how close any of them will get to being implemented. Regardless, advocates across higher education say they are alarmed to see such proposals gain traction at all with Republicans.

“It’s shocking to me, because this amount of cuts is not happening in reaction to like a budget crisis, like a recession,” said Jessica Thompson, a higher education policy expert with The Institute for College Access and Success. “This really feels different in the sense that it is not something that there is an external push or a need for. So it feels more ideological in a way.”

The U.S. House Committee on Education and the Workforce has suggested several possible ways to overhaul student loan programs. Some would reduce student access to federal aid for college.

On the chopping block potentially are several plans students can opt into to repay their loans, including the SAVE plan introduced by the Biden administration. That plan doesn’t require borrowers to make payments if they earn less than 225 percent of the federal poverty line — $32,800 a year for a single person — and prevents interest from adding to balances as long as borrowers make their monthly payments. The SAVE plan already was put on hold after Republicans challenged it. Some plans do not appear to be targeted, including one that caps loan payments based on borrowers’ income level.

The proposals could be considered as soon as this spring in a process known as budget reconciliation that would allow Republicans to squeeze them through Congress purely on party-line votes.