Illinois treasurer cites private tuition restriction on college savings plans

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SPRINGFIELD — Illinois families with Bright Start or Bright Directions college savings plans will not get a break on their state taxes if they use those accounts to pay for private K-12 tuition, Treasurer Mike Frerichs said Thursday.

And if they try to claim that deduction, they could potentially face a tax penalty from the state, he further warned.

The new federal tax law includes a provision allowing families with so-called 529 college savings plans, originally only for higher education expenses like tuition, fees and books, to use those tax-deductible funds for private K-12 tuition starting this year.

“Our analysis concludes that families who use Bright Start or Bright Directions money on elementary or high school expenses and then cite those expenditures when seeking tax relief will be in conflict with state law and could incur tax penalties if audited by state authorities,” Frerichs said.

The Illinois Department of Revenue concurred with the treasurer’s analysis, saying “the Illinois plans only allow expenditures on post-secondary education without penalty,” and that “In order to expand the definition of qualified expenditures, section 16.5 of the State Treasurer Act would need to be amended.”

The idea behind Illinois’ 529 savings programs, Bright State and Bright Directions, is to incentivize state taxpayers to save money for themselves or loved ones to attend college. The plans have been popular as they are not subject to federal income taxes and contributions are tax-deductible up to $10,000 for an individual or $20,000 for a married couple on state income taxes. And when it comes time for college, withdrawals from these accounts are exempt from state and federal taxes.

According to Frerichs, more than 450,000 accounts are open in Illinois, with about $9 billion invested in them.

“The whole idea on the state tax deduction was to incentivize saving for college,” Frerichs said. “It was not to incentivize private education.”

Though Illinois residents with plans will be able to use them for private K-12 tuition, they will have to pay the regular 4.95 state income tax rate on that cash. But, many, namely the wealthy, still stand to benefit from escaping federal taxes.

“Anytime you put a benefit in the code, the wealthy most likely will use it more aggressively unless the benefit is phased out at higher income levels — as is the case with many benefits put in the tax law,” said DePaul University professor Ron Marcuson, a tax expert. “I have not analyzed all aspects of Section 529 plans but it does not appear the benefit is phased out as the taxpayer’s income increases.”

However, Frerichs is worried that the confusion caused by conflicting state and federal policies will lead policyholders to write off that expense as a state tax deduction.

The Democratic treasurer said such a write-off, in addition to violating Illinois tax code, is in conflict with the spirit of the program, to save money long-term for college. Instead, Frerichs said the new federal provision opens up opportunities he likened to money laundering.

“Now you could see someone who’s already sending their kid to private school, has a $10,000 tuition bill; instead of giving $10,000 directly to the school, they can put it into a 529 account and then next day, write a check from their 529 account to a school,” Frerichs said. “They’ve not actually saved any money and they didn’t invest in it, they didn’t earn any interest off it. It’s just basically money laundering, it’s a pass-through for tax avoidance.”

If this were to occur, Frerichs said it would could have a negative impact on tax revenue for the state.

“There’s uncertainty of what’s going to happen if they write a check,” Frerichs said. “We want them to know that there are potential penalties out there for doing this, but our hope also is that the General Assembly and the governor will provide some clarity on what they would like.”

 

 

 

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January 18, 2018 at 07:09PM

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Illinois treasurer cites private tuition restriction on college savings plans

Gubernatorial Candidates Forum at Knox College

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The Knox College Democrats will host a Gubernatorial Candidates Forum tomorrow.  The student group invited Daniel Biss, Bob Daiber , Tio Hardiman, and J.B Pritzker.  Pritzker can’t make it and will send Julia Stratton to speak for him. Chris Kennedy also received an invitation but won’t attend.

 Galesburg residents and Knox College students will ask the candidates questions.  

The forum will be held at Kresge Recital Hall in Knox College on Tuesay at 7 p.m.

Western Illinois University and Augustana College Democrats are co-sponsers of the Illinois Gubernatorial Candidates Forum.  

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January 16, 2018 at 08:07AM

Gubernatorial Candidates Forum at Knox College

Slowik: Area Democrats talk finances, direct digs at Rauner

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I figured the panel of three state lawmakers, a Cook County commissioner and a Chicago alderman would talk about taxes, budgets and pension costs Thursday morning.

But with elections coming up, I should have known the five Democrats would be unable to resist making a few politically inflammatory remarks, including some digs directed at Republican Gov. Bruce Rauner.

Reaction to a recent crime spree involving carjackings, high-speed chases and gun violence rounded out the discussion.

Saint Xavier University’s 12th annual legislative breakfast gave a few dozen residents, business leaders and other community members the chance to hear elected officials provide a public update on a range of issues.

Panelists were asked about state funding for higher education. Public universities, private institutions and community colleges survived more than two years without most of their anticipated state funding during the budget impasse, said state Sen. Michael Hastings, D-Tinley Park.

“I believe the legislature will pass a responsible budget in 2018,” he said. “But will the governor sign it? The governor is a little erratic these days.”

Uncertainty over funding is hurting enrollments, but Governors State University in University Park saw its number of applications quadruple this year after passage of the first full-year state budget since 2014, Hastings said.

Funding cuts for higher education, public transportation and other areas, along with an income tax hike, were needed to restore balance to the state’s finances, said state Sen. Bill Cunningham, D-Chicago.

“We still have a rather large hole we have to climb out of,” Cunningham said. “I think next year’s budget will not be nearly as difficult as the last one … I don’t think the governor wants to be bogged down in Springfield when he’d rather be out campaigning.”

Some institutions are struggling with declining enrollments due to population shifts and other factors unrelated to the budget impasse, said state Rep. Kelly Burke, D-Chicago.

“There needs to be some transformative thinking at institutions,” Burke said. “They need to change in order to thrive.”

Cook County Commissioner Bill Daley, D-11th, said the budget recently approved by the county board cut 300 jobs and eliminated an additional 1,000 vacant positions. County leaders resorted to the cuts to reduce a budget deficit after negotiations with labor unions proved unsuccessful, he said.

“We asked unions to take furlough days,” Daley said. “We tried working with the unions. Unfortunately they did not cooperate.”

Panelists noted that Thursday marked the last day of the county’s widely unpopular penny-an-ounce “soda tax” on sweetened beverages.

“In all my years of public service I’ve never seen a tax that met so much opposition from the public and businesses,” Daley said. “I think we took a hit because we were the last of many new taxes.”

Moderator Ed Maloney, a retired state senator, asked about Rauner’s recent TV ads that feature governors of three neighboring states sarcastically thanking House Speaker Michael Madigan, D-Chicago.

“Madigan is one of the smartest individuals in government I know,” Daley said. “Previous governors knew the budget was their key responsibility. You could have a social agenda, but your sole purpose is to pass a budget.”

Hastings criticized Rauner for pushing anti-union “right-to-work” legislation, his unwillingness to compromise and political inexperience.

“This guy hasn’t stopped campaigning since day one,” Hastings said. “I try to be quiet about these things but I can’t help it. My district is the heart and soul of organized labor in the entire state of Illinois.”

Large numbers of tradesmen, teachers, public safety and other government workers live in the area, Hastings said. He said Rauner once invited him to the Governor’s Mansion to talk issues over beer and cigars.

“He asked me, ‘How do you feel about organized labor?'” Hastings recalled. “‘How do you feel about unions in the state of Illinois?’ as if he didn’t do his research about the district I represent.”

“‘Would you be willing when the time came to take a vote and make Illinois a right-to-work state or diminish workers’ rights?'” Hastings said the governor asked. “It’s almost like getting a slap in the face, right there, when it’s one-on-one. I didn’t know whether to go off the chain or whether to be calm.

“But I’m thinking to myself, ‘These people are my neighbors, these people are my family members, these people put food on the table for their children, and I’m going to vote against that? You’ve got to be out of your mind.’ It’s an example of his lack of leadership, and knowing who you’re talking to.”

I find it interesting that Democratic lawmakers have said Rauner tried to flip them, but when all was said and done it was a handful of Republican House members who defected from the party and voted with Democrats to override the governor’s budget veto.

In addition to jobs and taxes, public safety often becomes an issue raised in contentious elections. Chicago Alderman Matt O’Shea, D-19th, addressed a recent crime spree that plagued Mount Greenwood, Beverly, Morgan Park and other neighborhoods in November.

O’Shea elaborated on several email alerts his office recently sent to constituents about a series of armed robberies, carjackings and other crimes. Assailants terrorized community residents by pointing guns at them and stealing their property during broad daylight, he said.

Chicago police apprehended four juveniles in connection with the incidents, he said.

“These were 15- and 16-year-old Chicago Public School students,” O’Shea said. “They were arrested, then released to the custody of their families.

“It’s ironic they were arrested walking out of school,” he said. “It’s so frustrating. The Chicago Police Department did its job. These weren’t professionals, these were kids. Where were the parents? It all starts at home.”

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November 30, 2017 at 03:15PM

Slowik: Area Democrats talk finances, direct digs at Rauner

Slowik: Area Democrats talk finances, direct digs at Rauner

http://ift.tt/2itBOt5

I figured the panel of three state lawmakers, a Cook County commissioner and a Chicago alderman would talk about taxes, budgets and pension costs Thursday morning.

But with elections coming up, I should have known the five Democrats would be unable to resist making a few politically inflammatory remarks, including some digs directed at Republican Gov. Bruce Rauner.

Reaction to a recent crime spree involving carjackings, high-speed chases and gun violence rounded out the discussion.

Saint Xavier University’s 12th annual legislative breakfast gave a few dozen residents, business leaders and other community members the chance to hear elected officials provide a public update on a range of issues.

Panelists were asked about state funding for higher education. Public universities, private institutions and community colleges survived more than two years without most of their anticipated state funding during the budget impasse, said state Sen. Michael Hastings, D-Tinley Park.

“I believe the legislature will pass a responsible budget in 2018,” he said. “But will the governor sign it? The governor is a little erratic these days.”

Uncertainty over funding is hurting enrollments, but Governors State University in University Park saw its number of applications quadruple this year after passage of the first full-year state budget since 2014, Hastings said.

Funding cuts for higher education, public transportation and other areas, along with an income tax hike, were needed to restore balance to the state’s finances, said state Sen. Bill Cunningham, D-Chicago.

“We still have a rather large hole we have to climb out of,” Cunningham said. “I think next year’s budget will not be nearly as difficult as the last one … I don’t think the governor wants to be bogged down in Springfield when he’d rather be out campaigning.”

Some institutions are struggling with declining enrollments due to population shifts and other factors unrelated to the budget impasse, said state Rep. Kelly Burke, D-Chicago.

“There needs to be some transformative thinking at institutions,” Burke said. “They need to change in order to thrive.”

Cook County Commissioner Bill Daley, D-11th, said the budget recently approved by the county board cut 300 jobs and eliminated an additional 1,000 vacant positions. County leaders resorted to the cuts to reduce a budget deficit after negotiations with labor unions proved unsuccessful, he said.

“We asked unions to take furlough days,” Daley said. “We tried working with the unions. Unfortunately they did not cooperate.”

Panelists noted that Thursday marked the last day of the county’s widely unpopular penny-an-ounce “soda tax” on sweetened beverages.

“In all my years of public service I’ve never seen a tax that met so much opposition from the public and businesses,” Daley said. “I think we took a hit because we were the last of many new taxes.”

Moderator Ed Maloney, a retired state senator, asked about Rauner’s recent TV ads that feature governors of three neighboring states sarcastically thanking House Speaker Michael Madigan, D-Chicago.

“Madigan is one of the smartest individuals in government I know,” Daley said. “Previous governors knew the budget was their key responsibility. You could have a social agenda, but your sole purpose is to pass a budget.”

Hastings criticized Rauner for pushing anti-union “right-to-work” legislation, his unwillingness to compromise and political inexperience.

“This guy hasn’t stopped campaigning since day one,” Hastings said. “I try to be quiet about these things but I can’t help it. My district is the heart and soul of organized labor in the entire state of Illinois.”

Large numbers of tradesmen, teachers, public safety and other government workers live in the area, Hastings said. He said Rauner once invited him to the Governor’s Mansion to talk issues over beer and cigars.

“He asked me, ‘How do you feel about organized labor?'” Hastings recalled. “‘How do you feel about unions in the state of Illinois?’ as if he didn’t do his research about the district I represent.”

“‘Would you be willing when the time came to take a vote and make Illinois a right-to-work state or diminish workers’ rights?'” Hastings said the governor asked. “It’s almost like getting a slap in the face, right there, when it’s one-on-one. I didn’t know whether to go off the chain or whether to be calm.

“But I’m thinking to myself, ‘These people are my neighbors, these people are my family members, these people put food on the table for their children, and I’m going to vote against that? You’ve got to be out of your mind.’ It’s an example of his lack of leadership, and knowing who you’re talking to.”

I find it interesting that Democratic lawmakers have said Rauner tried to flip them, but when all was said and done it was a handful of Republican House members who defected from the party and voted with Democrats to override the governor’s budget veto.

In addition to jobs and taxes, public safety often becomes an issue raised in contentious elections. Chicago Alderman Matt O’Shea, D-19th, addressed a recent crime spree that plagued Mount Greenwood, Beverly, Morgan Park and other neighborhoods in November.

O’Shea elaborated on several email alerts his office recently sent to constituents about a series of armed robberies, carjackings and other crimes. Assailants terrorized community residents by pointing guns at them and stealing their property during broad daylight, he said.

Chicago police apprehended four juveniles in connection with the incidents, he said.

“These were 15- and 16-year-old Chicago Public School students,” O’Shea said. “They were arrested, then released to the custody of their families.

“It’s ironic they were arrested walking out of school,” he said. “It’s so frustrating. The Chicago Police Department did its job. These weren’t professionals, these were kids. Where were the parents? It all starts at home.”

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November 30, 2017 at 03:15PM

Slowik: Area Democrats talk finances, direct digs at Rauner

Slowik: Area Democrats talk finances, direct digs at Rauner

http://ift.tt/2itBOt5

I figured the panel of three state lawmakers, a Cook County commissioner and a Chicago alderman would talk about taxes, budgets and pension costs Thursday morning.

But with elections coming up, I should have known the five Democrats would be unable to resist making a few politically inflammatory remarks, including some digs directed at Republican Gov. Bruce Rauner.

Reaction to a recent crime spree involving carjackings, high-speed chases and gun violence rounded out the discussion.

Saint Xavier University’s 12th annual legislative breakfast gave a few dozen residents, business leaders and other community members the chance to hear elected officials provide a public update on a range of issues.

Panelists were asked about state funding for higher education. Public universities, private institutions and community colleges survived more than two years without most of their anticipated state funding during the budget impasse, said state Sen. Michael Hastings, D-Tinley Park.

“I believe the legislature will pass a responsible budget in 2018,” he said. “But will the governor sign it? The governor is a little erratic these days.”

Uncertainty over funding is hurting enrollments, but Governors State University in University Park saw its number of applications quadruple this year after passage of the first full-year state budget since 2014, Hastings said.

Funding cuts for higher education, public transportation and other areas, along with an income tax hike, were needed to restore balance to the state’s finances, said state Sen. Bill Cunningham, D-Chicago.

“We still have a rather large hole we have to climb out of,” Cunningham said. “I think next year’s budget will not be nearly as difficult as the last one … I don’t think the governor wants to be bogged down in Springfield when he’d rather be out campaigning.”

Some institutions are struggling with declining enrollments due to population shifts and other factors unrelated to the budget impasse, said state Rep. Kelly Burke, D-Chicago.

“There needs to be some transformative thinking at institutions,” Burke said. “They need to change in order to thrive.”

Cook County Commissioner Bill Daley, D-11th, said the budget recently approved by the county board cut 300 jobs and eliminated an additional 1,000 vacant positions. County leaders resorted to the cuts to reduce a budget deficit after negotiations with labor unions proved unsuccessful, he said.

“We asked unions to take furlough days,” Daley said. “We tried working with the unions. Unfortunately they did not cooperate.”

Panelists noted that Thursday marked the last day of the county’s widely unpopular penny-an-ounce “soda tax” on sweetened beverages.

“In all my years of public service I’ve never seen a tax that met so much opposition from the public and businesses,” Daley said. “I think we took a hit because we were the last of many new taxes.”

Moderator Ed Maloney, a retired state senator, asked about Rauner’s recent TV ads that feature governors of three neighboring states sarcastically thanking House Speaker Michael Madigan, D-Chicago.

“Madigan is one of the smartest individuals in government I know,” Daley said. “Previous governors knew the budget was their key responsibility. You could have a social agenda, but your sole purpose is to pass a budget.”

Hastings criticized Rauner for pushing anti-union “right-to-work” legislation, his unwillingness to compromise and political inexperience.

“This guy hasn’t stopped campaigning since day one,” Hastings said. “I try to be quiet about these things but I can’t help it. My district is the heart and soul of organized labor in the entire state of Illinois.”

Large numbers of tradesmen, teachers, public safety and other government workers live in the area, Hastings said. He said Rauner once invited him to the Governor’s Mansion to talk issues over beer and cigars.

“He asked me, ‘How do you feel about organized labor?'” Hastings recalled. “‘How do you feel about unions in the state of Illinois?’ as if he didn’t do his research about the district I represent.”

“‘Would you be willing when the time came to take a vote and make Illinois a right-to-work state or diminish workers’ rights?'” Hastings said the governor asked. “It’s almost like getting a slap in the face, right there, when it’s one-on-one. I didn’t know whether to go off the chain or whether to be calm.

“But I’m thinking to myself, ‘These people are my neighbors, these people are my family members, these people put food on the table for their children, and I’m going to vote against that? You’ve got to be out of your mind.’ It’s an example of his lack of leadership, and knowing who you’re talking to.”

I find it interesting that Democratic lawmakers have said Rauner tried to flip them, but when all was said and done it was a handful of Republican House members who defected from the party and voted with Democrats to override the governor’s budget veto.

In addition to jobs and taxes, public safety often becomes an issue raised in contentious elections. Chicago Alderman Matt O’Shea, D-19th, addressed a recent crime spree that plagued Mount Greenwood, Beverly, Morgan Park and other neighborhoods in November.

O’Shea elaborated on several email alerts his office recently sent to constituents about a series of armed robberies, carjackings and other crimes. Assailants terrorized community residents by pointing guns at them and stealing their property during broad daylight, he said.

Chicago police apprehended four juveniles in connection with the incidents, he said.

“These were 15- and 16-year-old Chicago Public School students,” O’Shea said. “They were arrested, then released to the custody of their families.

“It’s ironic they were arrested walking out of school,” he said. “It’s so frustrating. The Chicago Police Department did its job. These weren’t professionals, these were kids. Where were the parents? It all starts at home.”

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November 30, 2017 at 03:15PM

Slowik: Area Democrats talk finances, direct digs at Rauner

College students fleeing Illinois for cheaper tuition. Legislature seeks to change that.

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As Carolyn Bossung, of Swansea, went through her college selection process, the financial cost played a role in which schools she considered, and ultimately where she attended.

The University of Missouri junior received the school’s Heritage Scholarship, which is open to students whose parents attended Mizzou, have ACT or SAT scores in the top 25 percent, and are non-Missouri residents.

With the scholarship, she only has to pay in-state tuition, which for this school year is $11,008, instead of $26,596 for out-of-state students without any scholarship. In-state tuition at the University of Illinois, by comparison, is more than $15,800 this year.

“It ended up working out. I was still close to home, about two hours out, I was getting in-state (tuition), and I didn’t know what I wanted to do, so I felt Mizzou gave me a lot of options,” said Bossung, who is double majoring in biology and education.

Bossung said she didn’t even consider public universities Illinois, expecting them to be more expensive. In some cases she is right. While tuition at the two Southern Illinois University campuses is lower for residents, it is higher at University of Illinois and Eastern Illinois University, for example.

While tuition is just one of the costs, it could be a contributing factor to a migration of Illinois students since 2000.

Out of-state tuition at the University of Missouri is $26,596. Altogether, a student paying resident tuition, housing and dining, books, fees and other expenses at Mizzou would pay $27,964 a year, compared with $43,552 for students paying out-of-state tuition and other expenses, according to the university.

In a study, the Illinois Board of Higher Education found that hundreds of millions of dollars more would come to state universities if the state didn’t have a net loss of students. It also found that the University of Missouri, University of Iowa, Indiana State University and Iowa State University attracted the most Illinois residents in 2014.

“Eliminating the net loss would result in more than $215 million in additional tuition and fee revenue to Illinois universities,” the board wrote in a letter to universities presidents and chancellors.

If we don’t keep people working in Illinois, we’re not going to be getting revenue in terms of tax revenue anyway. And if we could get somebody to work and live in Illinois five years after college graduation, we’ve got a pretty good chance we’re going to keep them here during their working life. We’re talking years of them producing.

State Rep. Katie Stuart, D-Edwardsville

Now Illinois legislators are trying to figure out ways to keep students from leaving the state, and potentially stay in state after graduating.

The net loss of students has been ongoing for more than a decade in Illinois, and may have been worsened by the state budget impasse. Without a budget in place, Illinois was not paying for Monetary Award Program grants, or MAP grants, which help cover some costs for students attending state universities.

In 2014, the state had a net loss of 16,623 students, according to the Illinois Board of Higher Education, up from 10,222 students in 2000.

There are different proposals that have been made in the Illinois General Assembly to try to encourage students to stay in state:

▪  One proposal, House Bill 230, calls for guaranteeing admission into the state university system if students graduate in the top 10 percent of their high school class and meet the ACT benchmark for college readiness.

“We have highly qualified students, but because of the high school they attend, they get overlooked, even though they’re top students in that high school,” said State Rep. Katie Stuart, D-Edwardsville. “It goes along hand in hand with the population of our universities not being representative of our population as a whole in terms of diversity.”

▪  Another proposal, House Bill 145, is a student loan forgiveness program for students who attend state universities. The proposal calls for students to live and work in Illinois for four years after graduating from school and maintain a high GPA while in college. With the average student loan debt being $30,000, up to $6,000 a year in student loan debt would be forgiven for up to five years.

▪  Under still another proposal, House Bill 3746, the state would offer an income tax deduction on interest on student loan payments, similar to the deduction of home mortgage interest payments.

“If we don’t keep people working in Illinois, we’re not going to be getting revenue in terms of tax revenue anyway,” Stuart said. “And if we could get somebody to work and live in Illinois five years after college graduation, we’ve got a pretty good chance we’re going to keep them here during their working life. We’re talking years of them producing.”

There are 166,087 students attending Illinois public universities this year, down from 172,664 students just two years ago, according to the Illinois State Board of Education.

Acknowledging that student migration out of Illinois was a problem, the Southern Illinois University board of trustees last year approved one tuition for all undergraduate students, regardless of where they’re from. This year that tuition is $8,772 a year — one of the most-affordable in the region.

“What has made SIUE viable is our strong programs, faculty, our internships and co-ops that lead to jobs,” said Todd Burrell, director of undergraduate admissions. “Being affordable at the same time makes us an attractive option for a lot of students.”

Burrell said undergraduate applications this year were running about 100 ahead of last year from Missouri alone. And admissions are up for students coming from Chicago and across Illinois.

“Our brand is out there,” he said.

In addition to MAP grants, the university also offers the so-called SIUE grant for students with greater needs to provide even more scholarship dollars to help keep the university competitive, Burrell said.

The student loan forgiveness idea would be attractive to Carolyn Bossung, the Swansea student at Mizzou.

“If I didn’t have to worry about so many loans, that would have opened up my search a lot,” she said.

When Missouri State University freshman and Belleville native Austin Quandt was going through his college decision process, he also considered the University of Illinois, where his brother, Hayden, attended.

It was a huge part in making my decision, just because I didn’t want to get out of college with a decent degree, but still be in a lot of debt.

Austin Quandt, Belleville native and freshman at Missouri State University

Finances played a big role in his decision to attend Missouri State in Springfield.

“It was a huge part in making my decision, just because I didn’t want to get out of college with a decent degree, but still be in a lot of debt,” Quandt said.

Quandt said his family is still working to pay off the debt from Hayden’s education.

“That’s pretty much when financially I tried to make the smarter, better decision both for myself and for my family,” Austin Quandt said.

Austin Quandt is paying in-state tuition at Missouri State of $7,306 a year. An out-of-state student is usually charged more than $14,700 a year just for tuition. Additional scholarships reduced the cost even more, said Lisa Quandt, Austin and Hayden’s mother.

“They made it so appealing, they threw money at us,” Lisa Quandt said. “(Austin) had the opportunity for quite a few scholarships just for leadership, let alone the money they were going to give you academically. Whereas when we looked at U of I … they don’t give anything. There’s just nothing out there.”

Austin Quandt said a student loan forgiveness would be attractive to him and could have made his decision more difficult.

“My decision was based more on the financial aspect of it, and I didn’t want to be in that much debt,” he said. “So I think if the student loan (bill) were to be enacted … I don’t know if it would have changed my decision, but it definitely would have affected it more.”

Net student migration loss for Illinois

  • 2000: 10,222 students
  • 2002: 11,352 students
  • 2004: 11,073 students
  • 2006: 4,913 students
  • 2008: 3,045 students
  • 2010: 10,972 students
  • 2012: 16,563 students
  • 2014: 16,623 students

Source: Illinois Board of Higher Education

Annual in-state tuition costs

Source: State universities

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November 21, 2017 at 11:45AM

College students fleeing Illinois for cheaper tuition. Legislature seeks to change that.

Guest View: Federal tax reform bill will harm college students

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Illinois college students and their families need a high-quality, affordable education now more than ever. Our private colleges and universities have worked hard to provide that quality education at an affordable — and increasingly competitive — price in recent years. But that progress faces a serious threat from Washington.

As the state has made historic funding cuts in the last decade, private campuses across Illinois have invested in students by controlling costs in many ways, seeking alternative ways to generate revenues to provide the high-quality education students need, and streamlining programs to provide more value for students’ investment.

These actions are in response to the needs of the students and families we serve. And in part, these actions address the call from lawmakers to slow down the increasing cost of higher education while still providing access to a college or university that best fits an individual student’s needs.

Now Congress, through its recently unveiled tax reform bill proposal, threatens to throw up additional roadblocks that threaten the financial stability of private nonprofit colleges and universities and their ability to serve students.

One ominous proposal would place a tax on private college endowments. The earnings from endowments, along with private fundraising and other institutional revenues, have long provided scholarships to students as well as base funding for academic programs. Cutting this revenue will decrease funding for needy students and increase the costs to offer programs. In Illinois alone, private colleges and universities annually contribute more than $1 billion in institutional aid, enabling tens of thousands of students to achieve a college degree. Taxing endowments makes little sense if our goal is to increase college participation.

Another part of the proposal would eliminate employer-provided education assistance, which provides much-needed assistance to working students by incentivizing employers to provide tuition assistance benefits. Most recipients of this benefit are non-traditional students trying to improve their skills and workplace mobility. Colleges, businesses and labor organizations all support this important benefit that allows employers to invest in their workforce, while allowing employees the ability to advance their education and experience.

If also enacted, the elimination of tax-exempt bonds for private colleges and universities could significantly raise the cost of capital projects, at a time when the need for infrastructure improvements and safety upgrades (many mandated by government) are greatly needed. This type of bond financing for nonprofits, which meets significant post-issuance disclosure and compliance requirements, is a proven tool with a decades-long record of success for providing vital public services and creating jobs. Low-cost access to capital helps keep private colleges and universities strong, enabling us to keep expenditures low so we can focus on the work we do for the public good and the students and families that we serve.

And there are other provisions that benefit students and institutions that are the target of new taxation. One of these include removing the student loan interest deduction, incredibly important as students start their careers and begin repaying student loans. Another is taxing employee tuition and dependent benefits, which help retain talented staff and would hurt the lowest-paid college employees the most.

A top goal of tax reform should be to support college students and the institutions they attend, not hurt them. Illinois private colleges and universities have a long commitment to providing educational services for the common good. As students succeed, so does our economy and state. Targeting private colleges and universities in this bill could have severe long term consequences, and further deters our national and state goals of having 60 percent of our adults holding some college credential by 2025. Congress should seek ways to encourage the American dream, not shatter it.

David W. Tretter is president of the Federation of Independent Illinois Colleges and Universities

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November 16, 2017 at 08:18PM

Guest View: Federal tax reform bill will harm college students