The House's plan to tax tuition waivers has been nixed
While polls indicate more than half the population doesn’t like the Republican tax plan, one group that dodged a bullet are graduate students.
They faced having waived tuition costs taxed under the House-passed version of the plan.
The provision that would have taxed grad students' tuition by an extra thousands of dollars annually, which universities currently waive, was struck from the compromise bill worked out between the House and Senate.
Typically Ph.D students around the country with a focus in science, technology, engineering and math (STEM) receive waived tuition. It means these Ph.D students don’t have to pay back their grad tuition if they’re a research or teaching assistant for their university.
About 145,000 students received waived tuition, according to the American Council on Education’s most recent study from 2011-12.
In late November, the tax reform bill passed by the U.S. House proposed taxing waived tuition. The Senate version did not include the provision. Congressional Republicans released a final draft of their tax bill on Dec. 15.
Votes in the House and Senate are expected this week.
400 percent increase
University of Delaware grad student Connor Dacey said the House bill would have been counterproductive to President Donald Trump’s charge to make America great again.
“Passing a bill like this, especially with a tax on the tuition, is making America ‘ignorant’ again,” said Dacey, 24, who’s on track to graduate in 2020 with a Ph.D in disaster science management.
As part of the agreement for receiving waived tuition, often it’s standard policy that participating students aren’t allowed to have a full- or part-time job.
This is the case for students at UD and Delaware State University.
At both institutions, students receive a modest stipend for living expenses, which is currently taxed. That money is intended to help cover necessities like a student’s rent, food and cellphone bill.
For example, UD grad student David Maisson, who’s married, receives about $20,500 in stipends annually.
Under the proposed House bill, his taxable income would jump to $50,500 because the value of his tuition would be added as income.
The total amount he’d end up paying in taxes would be about $5,000, compared to the $1,552 he’s paying under the current model, according to calculations by The Tax Institute at H&R Block.
By comparison, a student who isn’t married would have had to pay a little more at $6,344 in taxes, which is over 400 percent more than what they’re paying currently.
Grad programs in peril
Maisson, who led a rally on campus against the bill last month, said the proposed tax would be “basically destroying graduate programs across the country” if it made it into the final tax bill.
“It means fewer people will be able to afford grad school, which therefore means fewer people will be able to contribute to research and teaching at universities.”
Ultimately, Maisson said, “faculty will end up having to close down their research programs.”
Peter Bothum, spokesman for the University of Delaware, said grad students are essential to a top-tier university like UD that specializes in research.
UD performs more than $143 million in sponsored research projects a year, Bothum explained. That puts the institution among the 100 largest research universities in the United States.
“Our research enterprise helps drive our nation’s economy,” the University of Delaware spokesman said. “Institutions like UD perform more than half the basic research in the United States, and a fifth of the nation’s applied research.”
Maisson, earning his Ph.D in behavioral neuroscience, has spent the last two years at UD testing the memory of rats in an effort to gain a better understanding of how human memory operates.
Joined by a team of peers working on the project, Maisson said their research could potentially lay the framework to finding a cure for Parkinson’s disease down the road.
“But what if there’s nobody working on a cure because there are no graduate students who can afford to attend?” Maisson asked.
‘Right now is pretty hard’
Grad student Patrese Robinson-Drummer shares an office space with Maisson at UD.
Raised in a low-income community in North Philadelphia, Robinson-Drummer, 30, is the only one in her family to graduate college. In January, she’s slated to earn her Ph.D and be the first in her family to achieve that.
Yet she was still concerned about the proposed tax reform, since her husband is a Ph.D student at Temple University with an estimated three more years to go.
A tax on her husband’s tuition would have severely affected their joint income, she said.
“We’re trying to find a cheaper place to live, which right now is pretty hard,” said Robinson-Drummer, who said she and her husband pay $950 in rent for their house in Wilmington.“We live, pretty much, paycheck to paycheck.
“Most grad students have a house, car and you have your phone bill. Most of your expenses go to these basic life necessities,” she said. “It’s like, what of these things do you cut out to compensate for having less income?”
DSU and Wesley chime in
Sandra DeLauder, vice provost dean for Delaware State University’s School of Graduate Studies and Research, said taxing waived tuition would have presented a serious challenge at her institution, which specializes in agricultural research.
“That would be a big hit to Del State because we’re here trying to grow,” DeLauder said. “We aspire to become a research-intensive campus, and we can’t do that without engaging students both at the undergrad and graduate levels.”
Wesley College president Robert E. Clarke also expressed concern.
“We owe it to our nation’s children and future to ensure we take all possible means to provide accessible, affordable and quality education,” he said, adding that change could have “negatively impact the accessibility and affordability of higher education.”
Maisson, who’s on pace to finish his Ph.D program between 2020 to 2021, is glad negotiators struck the provision from the final bill.
“I think if we’re negatively impacting students, we’re going to negatively impact universities as a whole,” he said.