Republican Tax Plan for Colleges Is a Self-Inflicted Wound

The tax reform plan now making its way through Congress has a number of measures that would hurt higher education in the U.S. The most worrying feature is that it would tax tuition waivers for graduate students as income, making it much more expensive for most students to get a Ph.D. It would also end tax deductibility for student-loan interest payments, dramatically increasing the already-crushing burden of debt for many former students, and deterring many young people from going to college in the first place.

This is a very bad idea. The U.S. university system is one of the country’s most important remaining economic advantages. Even as manufacturing industries have moved to China, the U.S. has retained its dominance in higher education. The research and technology output of American universities, and the skilled postgraduate workers they produce, are an important anchor keeping knowledge industries -- Silicon Valley, the pharmaceutical industry and the oil services industry, to name just three -- clustered in the country, instead of fleeing to places with lower labor costs. Degrade higher education, and the U.S. will become a much less attractive place for cutting-edge industries, and less important to the global economy.