SENATE BILL: Independent Educational Institution Relief Act (Redraft Passed)

[🐒Gods of Prosperity🔱🐲💸]

There is no reason that institutions of learning should be taxed out of existence, or students priced out of attending, just because they either do not qualify for federal loans or are against receiving tax dollars on principle. This is an overreach of government authority and ought to be corrected.

[🐒Gods of Prosperity🔱🐲💸]

Yes, some colleges are paying this tax.  Federal aid is not available for students attending institutions run by for-profit companies.  Also there are some colleges such as Hillsdale that have a philosophical objection to accepting federal aid.  So I imagine there is some revenue from this tax, but not enough to justify this policy.

[🐒Gods of Prosperity🔱🐲💸]

Yes, some colleges are paying this tax.  Federal aid is not available for students attending institutions run by for-profit companies.  Also there are some colleges such as Hillsdale that have a philosophical objection to accepting federal aid.  So I imagine there is some revenue from this tax, but not enough to justify this policy.

Oh god, I do hate for-profit schools though, especially ones run by consortiums that are essentially degree mills and students graduating from these schools have no job prospects and come out with loads of debt. There is a company that runs Charlotte Law School and they are backed by a hedge fund. They charge $40k a year and their students literally have no jobs when they come out.

Yeah, so I'm fine that we don't fund loans to those institutions, but we shouldn't then turn around and punish them for not having loans we don't offer them and make students lose even more money.

[🐒Gods of Prosperity🔱🐲💸]

Hostile, of course.

That is an extremely blunt and counterproductive way of going about protecting students.

[🐒Gods of Prosperity🔱🐲💸]

I know this may not be popular for me to say, but the more I think about it, the more keeping this tax intact makes sense. I have a strong disdain for for-profit educational groups. They prey on kids without many future prospects, and kids that are scared. They tell them unrealistic things to get them in, charge them a hefty tuition and send them on their way no better than they were before.

If this tax is hurting the student, I would be willing to consider repealing the tax. Typically though, the loans funded by these private groups are on par with the public loans. If I'm wrong, please correct me. I'm all for helping the student, but if this will only help the folks making money off these poor kids, I'm for keeping it.

I hope my view at least makes sense to some people. I don't want to appear like I am a friend to the for-profit educational consortiums, because I'm not.

I don't understand. Are you saying that it doesn't matter how the tax increases the tuition cost for the student because there are private loans to cover it?

Let's also remember if there is a corporation making money off of a college then they are already paying the corporate income tax. 

[🐒Gods of Prosperity🔱🐲💸]

You seem to be comparing tuition cost at other private universities with tuition cost at for-profit universities before the tuition tax, so I don't think that tells us how the tuition tax is affecting cost.   I'd say let's just go with the common sense observation of what we see with almost all taxes, particularly sales or excise taxes, which is that they get passed on to the person buying the product.

It would be good to find a way we can help students from being burdened by loans they won't be able to pay back, but the current tax doesn't help with that at all.

[🐒Gods of Prosperity🔱🐲💸]

Because these for-profits are charging the same rates as other non-profit private universities which do not pay the tax, I think we can assume the tax is not effecting the students too badly, at least not any worse than attending the school in the first place is effecting them.

again, I do not know where you could be getting tuition rate information for colleges that pay a 50% tax on tuition, since since a scenario does not exist IRL.
I don't assume that a 50% tax translates into a 50% tuition increase.  I do think it is reasonable to assume that it most likely means some substantial increase. 

[🐒Gods of Prosperity🔱🐲💸]

Nay

[🐒Gods of Prosperity🔱🐲💸]

Here is an amended version of my bill I would like to put forward

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[🐒Gods of Prosperity🔱🐲💸]

Object on the grounds that athletics are a student program and thus the athletics department is going to be looked at like an "easy out" to solve the taxation issue

do you prefer we stay with my original bill?

[🐒Gods of Prosperity🔱🐲💸]

I also object.

Why?

We can look into clearing up the athletics issue after we move forward with the amendment.

[🐒Gods of Prosperity🔱🐲💸]

AYE

I am curious  to know why Senators Talleyrand and TNF prefer to remain with the original version of my bill rather than this amendment.

[🐒Gods of Prosperity🔱🐲💸]

AYE

I am curious  to know why Senators Talleyrand and TNF prefer to remain with the original version of my bill rather than this amendment.

I prefer not to amend the original bill at all.

This is a vote on the amendment and not a final vote.  If this vote fails we will go back to the bill as I introduced it.

[🐒Gods of Prosperity🔱🐲💸]

My concern here is the same as Tyrion's. It seems very likely colleges and universities will attempt to use their athletics programs to avoid taxation (and I do not believe that athletics programs should be exempt from taxation under the amendment you've proposed either, were it to pass).

We can work on a fix for the loophole of using athletics to divert tuition to corporate profit. However, to place this tax on all athletics programs would be creating a new tax and it's not something I can support.

[🐒Gods of Prosperity🔱🐲💸]

Do for-profit institutions even have athletic programs? Regardless, I am still not fully sold on giving these degree mills any sort of tax relief whatsoever.

A few points:

We are talking in some cases about nationally and/or regionally accredited programs, so if the intent is to go after diploma mills, this is not a good proxy.  These places may provide programs that would not otherwise be easily available to people, even if the quality varies greatly.

We have already cut all federal loans, which for most for-profit colleges was the majority of their source of revenue.

The large for-profit universities and corporations will be paying a 45% rate under this bill (20% + 25% corporate tax). If I need to pull that up a few percentage points to get support for this bill, I will.

This bill encourages universities to invest more of their revenues in educational pursuits and to offer loan forgiveness programs.  The current policy does neither.

Finally, the tax in the previous bill affected more than just for-profits, so if nothing else let's fix that.

[🐒Gods of Prosperity🔱🐲💸]

What of I made this simple change in the wording?:

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I think that would address the diversion issue so that if it ends up as profit taken out of the programs, it is not exempt since it is still derived from tuition.

[🐒Gods of Prosperity🔱🐲💸]

Do for-profit institutions even have athletic programs? Regardless, I am still not fully sold on giving these degree mills any sort of tax relief whatsoever.

A few points:

We are talking in some cases about nationally and/or regionally accredited programs, so if the intent is to go after diploma mills, this is not a good proxy.  These places may provide programs that would not otherwise be easily available to people, even if the quality varies greatly.

We have already cut all federal loans, which for most for-profit colleges was the majority of their source of revenue.

The large for-profit universities and corporations will be paying a 45% rate under this bill (20% + 25% corporate tax). If I need to pull that up a few percentage points to get support for this bill, I will.

This bill encourages universities to invest more of their revenues in educational pursuits and to offer loan forgiveness programs.  The current policy does neither.

Finally, the tax in the previous bill affected more than just for-profits, so if nothing else let's fix that.

Diploma mills may be nationally accredited. Just look at the number of for-profit law schools that have sprung up in the last 10-15 years. They are nationally accredited, but their employment numbers and qualify of education are still garbage, but they are accredited because they are money making machines.

We can fix the issue where the tax affected more than just for-profits. I don't want to tax schools that are nonprofits.

I don't foresee any of this really affecting the price of tuition though. The real root of that problem is that higher education is now heavily subsidized by the government, and in turn, colleges have raised their tuition rates because there is enough demand for their services and easy money to pay for them. Unfortunately, I don't see this bill really changing all that much.

With that rant aside, I am fine with clearing up the language in the bill to make the tax affect for-profit schools only, because I really don't believe you need to be making huge profits off education.

I find the idea that for-profit education=diploma mill to be a gross simplification, but okay.  I guess I just expended a lot of useless effort trying to bend over backwards.

[🐒Gods of Prosperity🔱🐲💸]

My assumption could be incorrect. I'm just going off my own knowledge of for profit educational groups that run schools. Many of these sprung up during the economic downturn to take advantage of all the people going back to school. If there are some reputable for profits, I will reconsider my position on them.

I don't know what you would need.  I don't know that there's any one standard for what defines a reputable college that can be referenced.  Clearly people have different experiences if we are going by anecdotes, and it will depend a lot on the specific programs.

How about the bill as it stands?  Can you accept the language with a few changes or do we need to start over?

[🐒Gods of Prosperity🔱🐲💸]

Reinvesting back into the facilities has never been an issue for for-profits. The bill as it is is pretty much tailored to what they'd want to see out of us. They're known for having terrific facilities to divert attention away from their poor academic record. I have no qualms with what they spend their money on, typically their facilities are excellent, it's the product they put forward.

I am okay with the tax rebate for forgiving loans of students. At the very least, that will help the student out with the debt these for profits shoulder onto them.

If they are investing it in their facilities they are doing the same thing non-profits do. 

Can you support it being a tax on profits rather than a tax on revenue?

[🐒Gods of Prosperity🔱🐲💸]

ECPI:  rated best online/nontraditional college for vets by Military Times.

eCornell:  subsidiary of Cornell U, organized as a for-profit, providing distance education.

I was trying to come up with a way that colleges would be taxed based on what they do with tuition money rather than whether the simple designation of for profit or non profit.  A college that spends twice as much money on academics and student programs as given to shareholders should be treated differently than when the proportion is the reverse, imo.  But what I'm hearing is that's not politically feasible.

I'm reconsidering the loan forgiveness thing. I want encourage debt relief, but be careful not to disincentivise colleges that do a better job keeping their students out of massive long-term debt.  I think maybe I'll go with a tax deduction (rather than a tax credit) for debt relief, matched with requiring a share of monetary responsibility in case of default.

[🐒Gods of Prosperity🔱🐲💸]

I am wondering if we painted with a broad brush with regards to these private institution. We need to have a clearer and more detail standard more so then just that they are for profit.

 

I was trying to make that point, but wasn't having much success.

In any case, here is my last attempt at this.  It addresses the concern about diversion of profits, I bumped the rate back up to 50%, and I added some accountability on default.  If this can't pass I don't know what will.   The modest standard deduction is to make this tax a tiny bit progressive and to hopefully keep small mom and pop shop vocational educational programs from being strangled for no reason.  If someone has a specific change they'd like to make to this, I'd encourage them to let the amendment go through and then offer their own amendment to it.

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[🐒Gods of Prosperity🔱🐲💸]

I object.

You completely ignore the discussion on this bill for a week and then you object for no discernible reason.  Is it just that you want to slow this bill down?  Have you realized that your own bills are so awful you want to keep this on the floor for as long as possible so we don't get to any more of them?

[🐒Gods of Prosperity🔱🐲💸]

Just to be clear, that amendment is to replace this, which is the language in the bill currently.

[🐒Gods of Prosperity🔱🐲💸]

I am okay with the student loan forgiveness bit, but the rest just seems like we are trying too hard. The whole purpose of the tax is to discourage for-profit education. Giving these companies tax breaks for "investing in their institution" is an easy way out for them to avoid the tax because, like I said, these for-profits typically have wonderful facilities to distract people from their poor educational track records.

These for-profits are typically either mostly on-line or in shopping centers.  Where I live community colleges have more impressive facilities. 

How is the tax supposed to discourage for-profit education?  I thought you said it doesn't increase the cost of tuition?   

I would hope that our purpose is to do something to try to keep students from being ruined by debt from for-profit schools, not just to limit their options as much as possible. Can you honestly tell me students will be worse off from this bill?  It seems like we are losing sight of the point.

[🐒Gods of Prosperity🔱🐲💸]

I object.

You completely ignore the discussion on this bill for a week and then you object for no discernible reason.  Is it just that you want to slow this bill down?  Have you realized that your own bills are so awful you want to keep this on the floor for as long as possible so we don't get to any more of them?

I've kept up with the discussion, I just haven't posted in this thread because I have little to add to it. There's literally no need for this legislation, as the previous bill is just fine. When you figure that out and stop shilling for for-profit colleges, then maybe you can advise me on how "awful" my legislation (which passes more often than not, I should add) is.

TNF, that doesn't answer my question.  Why are you objecting to the current amendment?  Do you prefer my bill as it is and don't want to change it?