Here's how the final GOP tax plan affects current, former and future students

Timothy A. Clary | AFP | GettyImages

This morning, the Senate passed a sweeping tax overhaul. The G.O.P tax bill permanently lowers the corporate tax rate from 35 to 21 percent and temporarily lowers individual taxes, with the largest breaks going to the wealthiest Americans.

Here's how the bill will affect future, current and former students:

Future students

The final tax bill will have an impact on how Americans save for college.

The bill will ban contributions to Coverdell Savings Accounts — to which families could deposit $2,000 per beneficiary, per year to be used for qualifying education expenses. Families will need to open 529 plans instead.

Previously available only to fund college expenses, under the new tax bill funds from 529 accounts can be withdrawn tax-free to be used for K-12 private school tuition and college expenses. The final bill allows all families, regardless of income level, to deposit $10,000 per beneficiary, per year into these accounts.

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Current students

Several provisions that would have increased taxes for current college students were not included in the final version of the bill. Previous versions of the bill would have increased taxes on graduate students receiving tuition waivers by roughly 400 percent. The former bill also would have increased taxes on students who receive tuition assistance benefits from their employer.

Met with push back on both sides of the aisle, these provisions did not make it into the final version of the bill, and taxes on current college students remain largely unchanged.

"No bill is perfect, but we fought to make it better and we did," said Republican Congressman Rodney Davis.

Former students

The Economic Policy Institute (EPI) reports that young college graduates between the ages of 18 and 30 make an average of $19.18 an hour, or $39,000 a year. In 2018, single filers in this income bracket who do not itemize would see a 3.2 percent tax decrease.

However, in 2026, their taxes would begin to increase again.

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