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Senate and House negotiators meeting this week to craft compromise tax-reform legislation plan to exclude from a final bill some controversial proposals affecting students and colleges, according to multiple reports.

Lawmakers from the two chambers of Congress agreed to drop provisions that would treat graduate student tuition benefits as taxable income and repeal student loan interest deductions. Both provisions were included in House tax legislation passed last month but left out of a bill that narrowly cleared the Senate Dec. 2.

Another provision of that House bill that was reportedly excluded in negotiations would have eliminated interest-free private activity bonds, an alarming prospect for the many private colleges that use the bonds to save on construction of new campus facilities.

The reports will be welcome news for many in higher ed as congressional Republicans push forward on a rapid timeline to pass and send to the president’s desk this month a bill overhauling the nation’s tax code.

College leaders and higher ed lobby groups have warned for weeks about dire consequences for the sector of proposals in the tax-reform plans. And graduate students across the country have mobilized protests and other actions to oppose the new tax on tuition waivers. Last week, those protests reached the office of House Speaker Paul Ryan as 40 students and activists demonstrated outside and nine were arrested.

Their concerns appeared to register with some members of Congress ahead of the conference negotiations. Representative Pete Sessions, a Texas Republican, circulated a letter among colleagues calling on GOP leaders in the House and Senate to drop the tuition-waiver proposal from a final bill.

Bloomberg reported Wednesday that Senator Steve Daines, a Montana Republican, said the graduate tuition provision would be dropped from a final bill. And Senator Mike Rounds, a South Dakota Republican, told the publication that grad students would be pleased with the final bill. Other outlets confirmed that report.

Sam Leitermann, president of the National Association of Graduate and Professional Students, said that his organization was pleased lawmakers had listened to the students.

“We believe in the importance of graduate students to innovation and progress in our country and the need to ensure graduate studies are preserved,” he said in an email. “Graduate voices remain strong and we will continue to advocate with them for graduate rights.”

Students who organized against the provision argued that it would essentially tax them on money that never goes into their pockets in the first place. That's because graduate students typically receive a tuition waiver in exchange for work as teaching or research assistants, but don't actually receive that money as additional income. Student organizers said rescinding the tax-exempt status of those benefits would make graduate education unattainable for many by adding thousands to their tax bills.

Steven Bloom, director of government relations at the American Council on Education, said dropping the proposal from a final bill would be an enormously important development for graduate students.

“They've worked very hard around the country, thousands of them, to preserve this provision and talk about why it's important and how it makes graduate education more affordable,” he said.

The Association of Public and Land-grant Universities said in a letter to top lawmakers on the House and Senate tax committees last week that about 55 percent of all graduate students made an annual income of $20,000 or less and nearly 87 percent made $50,000 or less in 2011-12, the most recent year for which data was available. Repealing the tax-exempt status of their tuition waivers would mean an unaffordable increase in taxable income, the group said.

Another proposal in the House tax bill reportedly left out of a final tax package, the elimination of student loan interest deductions, would exacerbate the debt loads of student borrowers, APLU said. Borrowers currently can deduct up to $2,500 annually from interest paid on student loans toward reducing their taxable income. Repealing that deduction could add hundreds to borrowers' tax bills. And repealing the deduction would mean the cost of student loans to borrowers would shoot up by $24 billion over 10 years, APLU said.

The Tax on College Endowments

Also Wednesday, a bipartisan group of nearly 30 lawmakers made the case in a letter to congressional leaders for dropping a proposed tax on the endowment income of private colleges.

House legislation would apply a 1.4 percent excise tax to private college investments valued at $250,000 per full-time student, while Senate legislation would apply the same tax to private college investments valued at $500,000 per full-time student.

That proposal, the lawmakers told Congressional leaders in the letter Wednesday, would jeopardize the financial aid of current and future students at a handful of institutions that already make generous need-based awards. And it would inevitably be applied to additional private colleges and public universities in the future, they said.

Moreover, the Senate endowment proposal would generate less than $2 billion in revenue over 10 years for a tax reform bill expected to cost more than $1.5 trillion, the lawmakers said.

The endowment tax, they said, “is unprecedented and poses a serious threat to higher education institutions and their ability to provide need-based financial aid to their students.”

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