"This is the one that hurts us the most," said Morse, who estimated that Penn has about $184 million in tax-exempt borrowing.
He and other education officials argued that the tax-exempt borrowing ''cap" places major private universities at yet another disadvantage compared to public universities such as Temple and Penn State, which are unaffected by the borrowing limit.
"It means we won't be able to renovate the School of Engineering," Morse said. "But at Penn State, because they are a state school, they can do that."
He labeled the bill "a punitive action directed at certain universities thought to be wealthy."
Higher education officials, especially those representing private colleges and universities, were almost uniformly gloomy about the tax overhaul agreed upon Saturday by Senate and House conferees. The bill still must be approved by Congress and signed by President Reagan, but higher education lobbyists said they consider its approval a sure thing.
"This is, as they say in this town, a done deal," said Sheldon Steinbach, general counsel in Washington to the American Council on Education, who called the tax bill damaging to higher education.
Schools affected by the legislation would have to find other, possibly more costly ways to raise capital to build or renovate facilities like laboratories, classroom buildings or dormitories.
Penn last floated a bond issue in 1985 in the amount of $80 million for improvements to dormitories, its instructional computer system and the clinical science lab, according to Scott C. Lederman, Penn's director of
investments.
"This will put pressure on our finances, and tuition is one of the things which will be affected," Lederman said.
Tuition, which is $11,200 a year for Penn's undergraduates, accounts for 23 percent of the university's $863 million annual budget.
After five years of persuading Congress to rebuff repeated attempts by the Reagan administration to sharply pare student aid programs, college spokesmen viewed the tax bill as an unusual legislative defeat for higher education.
"I guess I'd have to say we weren't terribly successful," said Nan Nixon, director of governmental relations at Harvard, which has more than $1 billion in tax-exempt debt.
Among the other provisions that have college officials grumbling:
* Certain key tax advantages of charitable gifts of stocks, bonds or real estate would be eliminated. Steinbach estimated this tax change alone could
cut $500 million to $600 million from the $6.5 billion in donations the nation's colleges received last year.
* Charitable giving in general, including gifts to colleges and universities, would become less attractive under the new tax bill. Tax benefits to upper-income donors would go down proportionately with the drop in the top tax bracket from 50 percent to 28 percent. And lower-income people and others who do not itemize deductions would no longer be able to deduct charitable contributions.
* Scholarships and fellowships covering room, board and other incidental expenses would no longer be tax-free. Only awards covering tuition and course- related equipment would remain tax-exempt.
Asked to explain why their usually successful lobbying efforts apparently fell on deaf ears this time, college officials noted that the tax bill was drafted by congressional tax-writing committees that regarded higher education as just another special interest pleading to be spared harmful tax changes.
In previous legislative battles, notably those in which the Reagan administration was trying to cut deeply into student aid, college lobbyists fared much better because those hearings took place before friendlier Senate and House education subcommittees, the officials said.
"On those committees there was a sense of paternalism toward higher education," said Penn's Morse. "But on the tax-writing committees, there was less concern."
"Clearly," he said, "we did not make our case."
