Berea College President Reacts to Passage of Tax Cuts and Jobs Act

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On Capitol Hill this week, Congress passed the Tax Cuts and Job Act. Last minute changes were made to the bill that had previously protected Berea College and other similar institutions that will now negatively affect the college by taxing its $1 billion in endowments.

The provision, which should be signed into law this week, would include a 1.4 percent excise tax on the college’s endowment. The wording of the bill originally excused colleges that did not operate on a normal tuition-pay model, which would exempt Berea college. The work college relies on endowments as students are promised tuition free schooling, so long as they maintain a job on campus. President Lyle Roelofs expressed his displeasure with the last minute tweaks to the wording of the provision, making the institution subjected to the tax.

He released this statement:

“We are very disappointed with the latest developments on the Hill. Berea College uses its entire endowment to educate students who could not otherwise afford to attend college, serving them on a no-tuition basis. We agree that there need to be incentives for schools to make higher education accessible to all students, but it seems so unfortunate that the political strife over tax reform in our country will result in greater difficulty for colleges seeking to serve low-income students.”

There are only a handful of other similar institutions nationwide that would also be affected by the provision, which according to reports stated that the exemption had violated Senate Rules and was thus removed. Berea College relies on over $1 billion in endowments to operate, which would now be subject to the tax.