This year, close to 3 million college students are graduating across America and will continue to pursue the American dream.
This dream means something different for every graduate. Some will continue their education and pursue higher degrees. Others will enter the workforce and perhaps aim to become business owners themselves. While others will become parents and work to provide better lives than they had for their children.
Regardless of the path that each graduate chooses, all avenues share one common attribute – uncertainty.
Of course, it is normal for graduates to feel anxious about entering this new chapter in their lives. However, these graduates have a unique experience. Many started their college careers in an America that was experiencing a frigid economic climate, record levels of unemployment, a crashing housing market, and the skyrocketing cost of education. They watched as many of their cohort graduated and could not find work – or had to take jobs for which they were overqualified.
Fortunately, as I write in my new book Trump’s America: The Truth About Our Nation’s Great Comeback, the country that we live in has dramatically changed over the last 18 months.
During President Donald J. Trump’s first year-and-a-half in office, the stock market has set multiple records. The Wall Street Journal reported in January that for the first time, the Dow Jones Industrial Average surpassed 25000 and the Nasdaq Composite “burst through 7000,” setting another record. According to the Bureau of Labor Statistics, unemployment dropped below 4 percent in May, an 18-year low, and the Black unemployment rate dropped to the lowest level ever recorded. On top of all of this, at the end of last year, Congress passed the largest tax cut and reform in 31 years.
The Tax Cuts and Jobs Act was a clear victory for Republicans – no Democrats voted for the bill – but more importantly, it was a victory for America. This new law has laid the financial foundation to help people across the nation, including recent graduates, reach their goals and realize their full potential.
For those graduates who wish to further their education, the Tax Cuts and Jobs Act includes benefits that will make financing their degrees more affordable. According to the Pew Research Center last year, Americans owed more than $1.3 trillion in student loans, with approximately 4-in-10 individuals under the age of 30 holding a piece of this massive debt. The Tax Cuts and Jobs Act kept the maximum $2,500 student loan interest deduction in place for lower-earning tax payers to ease the financial burden that these payments have on so many Americans – particularly recent graduates.
The law also allows employers to provide up to $5,250 per year tax-free toward an employee’s education in qualifying programs. This financial aid ultimately works to benefit graduates and businesses by equipping employees with a more diverse range of skills and knowledge. If this assistance were to be taxed, it would cause increasing financial strain on students.
Additionally, the law does not include tuition waivers that graduate students receive for teaching at or doing research for their universities as income.
New graduates who are entering the workforce will also benefit from the tax cut law. As I explain in Trump’s America, the Tax Cuts and Jobs Act will result in larger paychecks for hardworking Americans, largely because, “the overall tax rates were reduced across the board. The lowest individual tax rate is 0 percent for individuals who report less than $9,525 taxable income, and the highest individual rate is 37 percent for those who make more than $500,000. … The intermediate tax rates are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, and 35 percent.”
According to a report published last year by the Hay Group division of Korn Ferry, the average salary for a 2017 college graduate was just under $50,000. Under the old tax system, this would place a single filer in the 25 percent tax bracket, but under the Tax Cuts and Jobs Act, this same individual will now be taxed under the 22 percent bracket. But that’s not all.
The Tax Cuts and Jobs Act nearly doubles the standard deduction for single filers from $6,500 to $12,000 and from $13,000 to $24,000 for joint filers. This means that single college graduates earning the average salary will not only be taxed at a lower rate – but that they will also not pay taxes on the first $12,000 of their taxable income. All of these benefits serve one common purpose – to put money back into the pockets of the American people so that they can determine how to spend, save, or invest their own, hard-earned money.
Finally, the increased Child Tax Credit, which doubled from $1,000 to as much as $2,000 per child for households earning less than $400,000 under the Tax Cuts and Jobs Act, will help those graduates with families as they transition into the next chapter in their lives.
Less than two years ago, the outlook for new college graduates was dim. However, thanks to President Trump and the Republican tax cuts, the graduates of the Class of 2018 now have the opportunity, the ability, and the resources to pursue their American dream.
Newt Gingrich was the Republican Speaker of the United States House of Representatives from 1995 to 1999. Follow him on Twitter @NewtGingrich. His latest book is Trump’s America: The Truth About Our Nation’s Great Comeback.