(U-WIRE) STANFORD, Calif. – Congress passed a $792 billion tax cut on Aug. 5, the largest tax cut in 18 years, which may have a significant impact on college students.

According to the Chronicle of Higher Education, if passed, the bill would offer tax breaks to students amounting to $7.2 billion over the next 10 years nationwide. The bill would also expand interest deduction for student loans.

Now, students can deduct the interest on their loans from their taxable income for only five years. The bill would eliminate this time restriction, allowing students to deduct the interest from their taxable income until their loans are repaid.

Also, more people would be eligible for these benefits. Current restrictions make the deduction available only to children of married couples with a combined income of less than $60,000. The bill would increase the limit to $80,000.

The legislation would also aid students and parents with college-savings plans. Interest on money in state college-savings accounts would be made tax-free starting in 2001.

Cynthia Hartley, director of Student Awards and manager of Financial Aid at Stanford University, said the plans “that would become tax-free would be the state programs, and not the private programs which serve many people.”

The private college-savings accounts would be made only tax-deferred, meaning that taxes are paid not as interest accumulates, but rather as money is withdrawn.

Given that private college-savings accounts will not be made tax-free, the bill is likely to have the fewest benefits where state programs are not already operating.

“There probably isn’t going to be much initial impact for many people in California, at least (as the California program is just starting),” Hartley said. “But for those (parents) funding their children from other states, it certainly could be beneficial.”

Another noteworthy provision of the bill is that it would renew government tax credits for universities’ money spent on research and development projects. Stanford gains these credits as it makes research partnerships with businesses in the private sector.

Republican congressmen hope to spend the time between now and Sept. 8, when the bill reaches the president’s desk, drumming up public support from their constituents to bolster unity and promote their legislation.

In a statement to the Associated Press Aug. 6, President Clinton promised to veto the bill, declaring that this bill “threatens Social Security and Medicare and imperils the prosperity that has brought real benefits to American families.”

-Rajat Bhatnagar, The Stanford Daily