When HNW Philanthropy Meets Student Debt Woes - Congress Mulls Legislation

Tom Burroughes

5 June 2019

Lawmakers in Washington DC are reportedly mulling a bill that might exclude post-graduation scholarship grants from gross income in the same way that scholarships are excluded. The measure is designed to ease some of the cost pain. This highlights how philanthropy and education can and should intersect.

Legislation being considered would, if enacted, mean that donors could make gifts to be used for scholarships to pay off acquired student debt. It lifts the fear that qualified recipients face tax consequences.

With tuition costs and student debt running into the hundreds of billions of dollars - and becoming major political as well as economic and education issues - the idea of harnessing philanthropy is interesting. Billionaires have in recent years - as chronicled by Family Wealth Report - made big gifts to higher education institutions. Donors include former New York mayor and media tycoon Michael Bloomberg, for example. But as the legislative initiatives suggest, an urgent channel for philanthropy could be students’ loans.

On March 6, 2019, Senator Gary Peters introduced a bill that would exclude post-graduation scholarship grants from gross income. That bill is called Workforce Development Through Post-Graduation Scholarships Act of 2019. The bill is co-sponsored by Senator Shelley Moore Capito . According to the Congress.gov website: "This bill modifies the requirements for calculating taxable income to exclude post-graduation scholarship grants from gross income in the same manner as scholarships are currently excluded."

In 2018, a bill along the same lines was introduced by Representative Darin LaHood - H.R. 6486, Workforce Development Through Post-Graduation Scholarships Act of 2018. It is in front of the House Ways and Means Committee, according to a report by Forbes.