The Republican tax plan currently moving through Congress could have potentially devastating effects on an unexpected group: graduate students.
Under the plan approved Thursday by the House Committee on Ways and Means, graduate students would be taxed on the tuition waivers they currently receive from universities in exchange for work like assisting professors or doing research. The House proposal would result in Ph.D. students essentially paying income tax on the sticker price of their education, a cost intended to be fully covered by their institution, for most students.
The proposal, along with many other provisions of the House bill, has drawn fierce criticism
from higher education groups. “The idea of taxing people on money they don’t get is absurd,” said Hunter O’Hanian, executive director of the College Art Association, who warns the House plan would upend humanities education in the United States.
Presently, only the cash stipend graduate students receive on top of the tuition waivers is taxed. Early estimates
by graduate students have calculated that the change could, in some cases, amount to a 300% tax hike on a group that is already struggling to get by on earnings that often hover at around $20,000 to $30,000 a year. Some argue the added tax burden created by the House proposal would turn getting a Ph.D. into a luxury commodity.
“It really is the straw that will break the back of higher education,” said Ian Bradley-Perrin, a member of the Graduate Workers of Columbia union. A third-year Ph.D. student at the school, Perrin receives an annual wage from Columbia of $23,000, and a tuition waiver that covers the full annual $56,000 cost of his education. If the House plan becomes law, he would be taxed the same as someone earning $80,000. The increased tax burden might force him to drop out (and he is certainly not alone
Whether a GOP tax bill does become law remains uncertain. But Ph.D. students have reason to be hopeful that even if a tax overhaul does reach the President’s desk, it might not be the House proposal. The Senate’s version of the tax bill, details of which were released Thursday, does not tax graduate tuition waivers and maintains several other deductions and credits aimed at students that would be cut by the House bill.
The Senate Finance Committee’s two-page summary
of its proposal even includes a bullet point specifically noting that the plan “preserves additional important elements of the existing individual tax system, including [...] education relief for graduate students.”
For opponents of taxing graduate tuition waivers, it is a heartening development that suggests Senate Republicans have heard the vocal criticisms of the House plan. “I’m certainly feeling more optimistic now that the Senate bill has come out,” said Patrick Thomas, director of the University of Notre Dame Law School’s Tax Clinic.
But he cautions that the process of passing the tax bill is just beginning. If the House and Senate tax plans each pass their chambers as is, they will go through reconciliation, a legislative process in which the differences are worked out. After that, a final tax overhaul is put to a vote in both houses. What provisions that bill ultimately includes remains to be seen, and final passage is far from guaranteed.
“Like anything with this Congress and this administration, it’s wait and see,” said Thomas. “I’m not placing any bets.”
In the meantime, Bradley-Perrin says the Senate bill doesn’t have his union—which is engaged in a separate legal battle with Columbia’s administration for official recognition—resting easy. They’re opposed to the totality of the tax plan, which slashes taxes on the ultra-wealthy, and not only to the provisions that concern graduate students directly.
President Trump has predicted that he will sign the the tax overhaul before Christmas.