Between grants and tax incentives, college is free to those who want it.
Elected Democrats and their technocrat allies want to create free college programs and cancel all student loan debt. There is just one problem: College is already free.
This is not a flippant remark. It is a reality ignored by cultural elitists eager to leverage their elevated platform for personal government bailouts.
Despite hefty sticker prices, students seldom spend tens of thousands of dollars on required institutional expenses. Most students receive grant aid from federal, state, and local governments. Colleges themselves usually discount their sticker price by offering students scholarships.
Taken together, the average net tuition and fee price paid by in-state students enrolled full-time in public baccalaureate-degree granting institutions is a manageable $3,250 a year.
Students do not necessarily need to cover those remaining expenses out-of-pocket. There are two federal tax incentives that cut college costs even further and make postsecondary education effectively free for students. The first option students have is to avoid debt entirely by working for an entity with a tuition assistance program. The second involves financing college with debt and then getting a job with a business that offers student loan repayment assistance.
Private sector companies can offer every employee up to $5,250 annually toward the eligible education expenses without either party paying a tax on the benefit. The $5,250 limit is more than enough considering the average student loan holder borrowers $30,000 for their education and pays roughly $3,800 a year on a standard 10-year repayment schedule.
Organizations have good reason to start these programs. They want to recruit the best and brightest people to join their team. A 2019 report by the Society for Human Resource Management found more than half of employers offer tuition assistance programs for their workers.
But only one in 10 companies had a similar student loan program. That’s because incentives matter. In 2019, there was no similar tax exemption for employer-made student loan payments.
Congress answered the call. In 2020, the Coronavirus Aid, Relief, and Economic Security Act expanded the Internal Revenue Code so both tuition assistance and student loan payments are tax-exempt. The Consolidated Appropriations Act of 2021 extended this tax incentive through 2025.
Congress gave entrepreneurial companies the certainty they needed to develop their own unique benefit systems. Now it is time for the private sector to step up and offer these services. It is a win-win situation. Employees gain additional skills, and employers become more productive.
These tax incentives are designed for deserving families. Promises of tuition-free college may sound nice to out-of-touch elitists, but low-income students cannot afford to quit work and go to school full-time. Democrats proposals do nothing for the families who depend on the prospective student’s paycheck.
The existing tax code empowers students to work, learn and climb the socio-economic ladder without fear of crippling debt. That’s why these tax-free employer-provided benefits are so crucial and why I am eager to see more businesses offer them.
The pandemic hit Americans hard. Congress acted quickly to strengthen the tax code to shield past and future students from burdensome college costs, help businesses recruit and retain employees, and spur economic growth.
There is no need for gimmicky, wasteful and bureaucratic “build back better” initiatives. Further federal interference is counterproductive. It is time to trust American ingenuity.
• Virginia Foxx, a Republican U.S. representative from North Carolina, is the ranking member of the House Education and Labor Committee and also serves on the House Oversight and Reform Committee.