Guest Commentary: GOP tax plan would make college less affordable

Guest Commentary: GOP tax plan would make college less affordable

By JILL MANZO

Congress and the Trump administration have introduced a tax cut plan that will make college less affordable for students and working-class families in Illinois.

The $1.5 trillion federal tax cut mostly benefits corporations and the wealthy. This tax cut for millionaires will be paid for in two ways. First, by increasing the deficit, Congress is passing the buck onto the Millennial generation. Second, Congress is eliminating tax credits and proposing damaging cuts to public programs on which low-income, elderly and students rely.

One of the cuts proposed by the Trump administration has been to eliminate the Public Service Loan Forgiveness (PSLF) program. This is in addition to tax changes in Congress that would eliminate the student-loan interest deduction and would tax tuition waivers — suddenly raising taxes on graduate students who receive waivers to cover tuition. More than 21,000 tuition and fee waivers are awarded by the University of Illinois system annually.

Created in 2007 during President George W. Bush’s second term, the PSLF program provides student loan relief to workers who work in certain public or charitable services. The program is intended to encourage individuals to enter and build careers in these occupations, which tend to be lower-paying than comparable private sector jobs. The program supports teachers, social workers, psychologists, public safety and religious workers, among others.

In a recent study that I co-authored with colleagues at the University of Illinois at Urbana-Champaign and the Illinois Economic Policy Institute, the typical beneficiary in our state is a young full-time millennial who earns a little more than $50,000 but carries a student loan debt burden of about $80,000.

If Congress enacts this portion of President Trump’s budget proposal, the effects on students and young workers would be dire. Fully 21,000 young workers in Illinois would be impacted, losing an average of $7,400 per year in annual benefits. Millennials would have $125 million less to spend in the state economy and 1,500 young workers would no longer be able to afford rent and would be forced to move back in with their parents.

What about the UIUC in particular?

About 17 percent of recent college graduates in Illinois accept employment opportunities in the public sector or an eligible nonprofit organization. This means that as many as 1,500 graduating students from the UIUC are eligible for the Public Student Loan Forgiveness every year. With the elimination of the PSLF program, these students would no longer have millions of dollars in financial assistance that they need to help pay off their student loan debt.

There would be economic consequences across the state. The PSLF program puts more money into the pockets of Illinois workers. When workers have lower levels of debt, they spend more of their disposable income back into the economy at restaurants, bars, stores and on homes. Cutting this program — equivalent to around 2 percent of the total cost of the administration’s tax cuts for wealthy corporations — would result in hundreds — even thousands — of job losses in Illinois. Perhaps more importantly, taxpayers would lose a valuable tool for recruiting talented young people to work in the public interest.

Illinois’ congressional delegation must consider the negative economic impacts of President Trump’s proposal to eliminate the PSLF program. Ultimately, cutting the PSLF is bad for students, bad for workers in the public sector, bad for local business owners and bad for taxpayers.

Jill Manzo is a Midwest researcher at the Illinois Economic Policy Institute. To read her latest research on the cost of cutting the Public Service Loan Forgiveness program in Illinois, go to illinoisepi.org.