The standard deal offered to graduate students is a simple one: In exchange for their labor, either as a student instructor or a research assistant, graduate-school tuition is waived.
One of the provisions of the House of Representatives tax reform bill — the Tax Cuts and Jobs Act, approved Nov. 16 — would regard the value of that graduate-school tuition as income. Meaning it would be taxed, even though that dollar amount does not appear on the grad student’s final payroll statement of the calendar year.
More than 145,000 graduate students are attending college for free, according to an estimate by the American Council on Education, which represents 1,800 college and university presidents across the country. For these students, who are often living on minimum-wage stipends, working long hours, studying and attending classes, repealing the tuition tax break could have dire financial consequences.
For Dacen Waters, 26, who is in his fourth year of pursuing a doctorate in physics at Carnegie Mellon University in Pittsburgh, the House bill would impose about a $7,000 tax increase, the New York Times reported Nov. 15.
The Mellon College of Science grants students an annual stipend of $29,400 and a $43,000 tuition waiver. Under the current proposal, their taxable income would rise to $61,000 from $19,000. That would effectively cut students’ net stipend by nearly $10,000 a year.
“I already feel like I’m less of a student and more of an employee,” said Waters, who says that his day mostly consists of research. “And that includes living paycheck to paycheck. If I had to absorb this, I definitely wouldn’t be able to continue pursuing a degree.”
He said such an increase would force him out of school, and possibly out of a career. “It’s pretty unheard-of to do anything in physics and not have a doctoral degree,” Waters said.
Not every graduate-school program is as expensive as Carnegie Mellon’s, of course, and private-school tuition is consistently higher than tuition at public universities. But the graduate-school premise — tuition is waived in exchange for your labor — remains the same, public or private. The House bill would take the grad student, a minimum-wage employee in terms or real income, and tax him or her at the rate of someone with considerably higher take-home pay.
Doesn’t seem like fair tax policy, does it?
According to the ACE, more than 60 percent of the students who would be affected are in science, technology, engineering or mathematics — research fields that have drawn the praise of Republicans, including President Donald Trump, in recent months.
The Association of American Universities, which represents 60 research universities, including Carnegie Mellon, said the tax plan threatened the viability of their doctoral programs. The universities award nearly one-half of all American doctoral degrees and 55 percent of those in the sciences and engineering.
The AAU president, Mary Sue Coleman, said the tax proposals “will have dire consequences for Americans who rely on research universities for undergraduate and graduate education.”
The stated objective of the Tax Cuts and Jobs Act is to bolster the middle class. When it comes to middle-class students looking to improve their job and income prospects by attending graduate school, the Tax Cuts and Jobs Act denies middle-class students – especially those who attended public school for kindergarten through 12th grade, as opposed to private school — that opportunity by pricing them out of the market.
This would be a simple supply-and-demand question if we were talking about a Rolls-Royce or a Cartier watch. But we’re not.
Should graduate school be, in effect, restricted to American students whose parents can afford to pay all of their college expenses or, in this case, pay the steep tax bill that would result in this provision staying in the final version of the tax legislation?
Are we willing to accept the “brain drain” that would result from access to grad school becoming even more restricted to foreign students, their education subsidized by their home governments, studying at American universities but taking that new knowledge back home instead of putting it to work here?
The Senate tax bill, up for a vote this week, leaves out most of the higher-education provisions of the House bill.
When the two bills reach the reconciliation stage, we urge House Speaker Paul Ryan and his colleagues to drop the higher-ed provisions from consideration in the final bill sent to President Trump for his signature.
Let’s make sure aptitude and achievement remain the only requirements for students who wish to pursue post-graduate degrees.