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The Honorable Richard E. Neal
341 Cannon House Office Building
Washington, DC 20515
 
November 6, 2017
 
Dear Congressman Neal:
 
With other members of the Mount Holyoke community, I have followed your recent reactions to the House tax reform proposal and I am heartened by your defense of higher education and of the working and middle class citizens who will be ill-served by provisions in the proposed legislation, provisions that will put a college education out of their reach.
 
With your commitment to Mount Holyoke and the many other higher education institutions in your district, and your deep knowledge of the financial challenges facing both families and institutions, you have keen insights into how the proposed legislation will make access to education harder for many.
 
In fact, as Ted Mitchell, President of the American Council on Education, has noted, “Taken in its entirety, the House tax reform proposal released today would discourage participation in postsecondary education, make college more expensive for those who do enroll, and undermine the financial stability of public and private, two-year and four-year colleges and universities. According to the summary of the legislation provided by the House Committee on Ways and Means, this bill would increase the cost to students of attending college by more than $65 billion between 2018 and 2027.”
 
As you know well from your time on our Board, access for low- and moderate-income students, and for students from underrepresented groups, is central to Mount Holyoke’s mission. In fact, 65 percent of our students this past year received need-based aid, with average packages of grants, scholarships, and loans exceeding $38,000, and more than 26 percent of our domestic students receiving Pell Grants. Overall, Mount Holyoke provides its students with more than $44 million a year in need-based financial aid with funds drawn from the endowment, annual giving to the College, and other sources.

So, provisions in the bill that will make charitable giving less attractive or that will tax endowments represent significant challenges and demonstrate a profound misunderstanding of how philanthropic giving and endowments work to support students and their families.
 
This past school year, for example, we drew $35 million from an endowment valued at $729 million at the end of the fiscal year. That $35 million represents 26% of the school’s operating budget and was used in large part to support scholarships and faculty salaries. 
 
If endowment income were taxed at the 1.4 percent rate proposed in the House bill, we would have had to pay approximately $1.2 million in tax last year. New annual expenses on this order would inhibit both our ability to provide aid to our students and the ability of our endowment to keep up with inflation. At the same time, the tax would serve as a disincentive to potential donors.

Other provisions, including eliminating tax deductions on interest for student loans, denying colleges access to municipal bond markets, restructuring the American Opportunities Tax Credit to the detriment of many students, repealing the Lifetime Learning Credit, and removing Section 117(d) benefits for staff and faculty members will also have negative effects on higher education. In many instances, these provisions will directly hurt those who hope to use higher education to open new economic opportunities for themselves or family members.
 
As dean of the New England delegation, you know first-hand how higher education is central to the economy of our region. Congress should find avenues to open more pathways to college and, indeed, to reward the investment by colleges and universities in their students. Instead, it looks as if this bill is designed to take precious resources from higher education and America’s students and families to support other priorities — priorities that do not seem to serve our national ideal of using tax policy to build a stronger republic by improving the lives of all of our citizens.
 
As President Franklin D. Roosevelt noted in his second inaugural address, “The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
 
This bill simply does not pass that test. We deeply appreciate your many years of work as a champion of tax policies that serve the interests of all Americans. Please count on Mount Holyoke to support you as you fight to keep access to an excellent higher education central to our national enterprise.
 
Sincerely yours,

Sonya Stephens
Acting President