College Tracks Closely Pending Education-Related Federal Tax Legislation

College officials have been closely monitoring tax legislation winding its way through Congress that could have profound implications for Mount Holyoke and other institutions of higher education.

Tax bills that differ on important issues have been passed by the House and Senate, and legislators are seeking to hammer out a final version in a conference committee this month. In letters to key members of Congress and to the Massachusetts delegation, President Joanne Creighton urged lawmakers to "use this opportunity to help students and families save for college, and assist them with tuition payments and loan repayments through the use of the tax code."

She expressed concern about several provisions in the House bill, including the repeal of the tax exemption granted to TIAA-CREF for annuity business. (TIAA-CREF handles retirement funds for employees at MHC and many other colleges and universities.) TIAA-CREF officials have warned that this change could lead to fee increases for participants and could cause benefits to decrease (by increasing costs and therefore reducing investment return).

Another provision of the House bill troubling College officials is a tax on tuition remission given to students and College employees. If included in final legislation, tuition waivers would be taxed as income. As with the revocation of the TIAA-CREF tax exemption, this provision is not included in the Senate bill, nor in President Clinton's proposed tax plan.

Creighton expressed her support for education-related tax incentives contained in the various proposals. "At Mount Holyoke, access for students of all socioeconomic backgrounds is a bedrock principle, but financial aid costs of more than $20 million annually have put severe pressure on our budget," she wrote. "We need legislators to support efforts of students and families to save for college [through alterations to the tax code], particularly in light of the move to reduce federal student aid funding as part of deficit reduction."

Members of the Mount Holyoke community who would like more information about these issues, or would like to know how to contact key members of Congress, may call the president's office at x2500.