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Wyden bill targets tax breaks to influence college admissions

WASHINGTON - Senate Finance Committee Ranking Member Ron Wyden, D-Ore., introduced legislation Wednesday to make the college admissions process fairer by ending tax breaks for donations made to influence admissions decisions.

Wyden said the recent college bribery and cheating admissions scandal highlighted the unfairness of the current system. Wealthy families make tax-deductible, six and seven-figure donations to increase the likelihood children are admitted to their preferred schools.

"While middle-class families are pinching pennies to pay tuition and graduates are buried under tens of thousands of dollars in student debt, wealthy families are greasing the skids to get their children into elite schools on the backs of those same families and graduates. It's absurd that the tax code subsidizes the top 1% buying their way into school," Wyden said. 

"Colleges and universities would be able to preserve the tax deductibility of all donations if they simply bar their consideration in admissions decisions. It's ‘one and done' — implement a policy and you're in compliance."  

The College Admissions Fairness Act would expand the tax code's charitable quid pro quo rules to cover situations where a child's family makes large donations to the university the child attends. For donations to a university to be fully tax-deductible, the institution must establish a policy that bars consideration of family members' donations or ability to donate as a factor in admissions.

The bill would also amend the Higher Education Act to require any institution that receives federal financial aid to implement such a policy and report the number of applicants, admitted students and enrolled students who are the children of donors. The Department of Education would make the data publicly available and institutions would include the information on their annual IRS filings.

If the university refuses to implement a policy that bars consideration of donations in admissions, deductions would be limited to $100,000 of donations over a six-year period prior to or during the child's university attendance. Deductions taken for donations in excess of $100,000 during the six-year period preceding a child's attendance would be recaptured. 


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