How the House GOP Tax Plan Would Affect Grad Students

The U.S. House of Representatives, on a largely party-line vote on Thursday, passed an overhaul of the tax code that could have far-reaching consequences for higher education — and especially for graduate students who work as teaching or research assistants.

The Republican-sponsored bill contains a provision that would tax tuition waivers provided to employees of colleges, including those graduate students. The waivers serve as a significant benefit to student workers who otherwise would not be able to afford to pay tuition on what is often meager pay from their institutions.

Those “qualified tuition reductions” are awarded to an estimated 145,000 graduate students and 27,000 undergraduates (many of them resident assistants), according to the College and University Professional Association for Human Resources. The association’s data also show that about 60 percent of the graduate students who receive waivers are seeking degrees in the sciences or technology.

Citing federal data, the Association of Public and Land-Grant Universities notes that nearly 55 percent of all graduate students had adjusted annual gross incomes of $20,000 or less, and 87 percent had incomes of $50,000 or less.

So far, the tax bill being considered in the Senate does not include the measure to tax tuition waivers. But the two chambers will have to agree on a single piece of legislation for it reach President Trump.

The uncertainty is already unsettling graduate students, one of whom wrote in The New York Times that the bill, if passed, would “devastate graduate research” and “decimate American competitiveness.”

While the details of any legislation have yet to be made final, its effect would vary depending on whether the student is a state resident or paying out-of-state tuition, and on marital status, in which case a spouse’s income and the presence of children would matter, among other factors.

The impact of taxing tuition waivers could be especially heavy on graduate students at private colleges who earn less in their actual paychecks than the value of the reduced tuition.

It’s also unclear how the proposed law would affect other kinds of financial awards to graduate students, such as fellowships, says Emily Roberts, who has a Ph.D. in biomedical engineering from Duke University and blogs about personal finance for doctoral students.

But even with the uncertainty, graduate students, organizations like the National Association of Graduate-Professional Students and various graduate schools have begun compiling estimates of how the proposal would raise the tax burden for research and teaching assistants. Here are a few examples:

• Sarah Smaga, a doctoral student in molecular biophysics and biochemistry at Yale University, estimates that taxes for someone like her would nearly triple, from $3,596 to $10,271. The annual stipend is a little more than $35,000, says Ms. Smaga, while the tuition waiver is more than $41,000.
• At the Stony Brook University, in the SUNY system, teaching assistants earn a little more than $19,000 in stipends and have tuition waivers of nearly $11,000, according to information prepared by the dean of the graduate school. In this case, the student’s taxes would increase from less than $900 to nearly $2,200, the dean calculated. The increase is far greater for nonresident students, whose tuition waivers are worth more than $22,000, making it appear, for tax purposes, that their annual pay more than doubled.
• A married couple in the University of California at San Diego’s Medical Scientist Training Program could see their taxes increase by nearly $12,000 a year — from $5,000 to $17,000 — if the tuition waivers of nearly $78,000 were included as taxable income.

Caitrin Connolly-Olszewski, a social worker whose husband is a doctoral student at the University of California at Berkeley, wrote in an email to The Chronicle that the effect of the House tax bill would hit low-income families especially hard.

Those who now rely on the social safety net would become ineligible for such programs if the price of tuition is included in their income, wrote Ms. Olsewski, who is the mother of two children. “Many of us simply don’t know how we will manage and if our families can even remain in academia if this goes through,” she wrote.

Eric Kelderman writes about money and accountability in higher education, including such areas as state policy, accreditation, and legal affairs. You can find him on Twitter @etkeld, or email him at eric.kelderman@chronicle.com.