Endangered: College Employees' Tuition Aid Tax Break

Article excerpt

Next year, Christopher Anderson will be a senior at Ohio Wesleyan University, completing a triple major in music, philosophy and 20th-century studies. With a grade-point average of 3.8, he aspires to join the Phi Beta Kappa honor society.

Yet if it were not for a tax break that allows colleges and universities to give employees tax-free tuition assistance, he might not be able to afford Ohio Wesleyan at all. And that tax provision is now under attack in Washington.

Anderson's mother, Pamela B. Anderson, a purchasing assistant at the school, said: "Like a lot of people out there, my husband and I earn too much to get financial assistance, not enough to pay for tuition. Without the tuition assistance, my kids might have gone to college somewhere, but not here." The tax break that lets Anderson attend Ohio Wesleyan, and will allow his sister, Kylie, to attend next year, is called the qualified tuition reduction exclusion. It allows college employees to escape taxes on the value of the tuition the college gives them. The tuition breaks can be granted either at the employee's home college, at another in the same conference, at a school with a reciprocal agreement, or - in some instances - in the form of a grant that can be used at any accredited institution. But a bill that has cleared the House Ways and Means Committee would tax the value of the tuition as income. The change was included in Republican tax proposals issued Tuesday by Rep. Bill Archer of Texas, the committee chairman. A revenue-raising part of the Archer plan would require employees of colleges and universities to pay taxes on the value of tuition breaks received by their children. Those who would eliminate the tax break say the issue is one of fairness. "Tuition costs are rising like crazy, and who sets the tuition price? …