Should Congress Tax Grad Student Tuition Waivers?


Should Congress Tax Grad Student Tuition Waivers?

Blog Post

By No Labels
12/6/2017

Should Congress Tax Grad Student Tuition Waivers?

At universities across the country, students who work as teaching or research assistants are often compensated with tuition waivers rather than a paycheck. Right now, those waivers are not taxed. But that could change.

A provision in the House version of the new tax bill would treat tuition waivers as income and tax them accordingly, a move that could balloon tax bills for tens of thousands of students. The Senate tax bill has no such provision.

As lawmakers begin to merge the House and Senate bills into a single piece of legislation this week, they will have to decide whether provisions like this will make it into the final bill. The outcome of all those decisions will have a direct impact on almost every household in America.

Tuition waivers are a good example of an initiative that could bring major change. There are more than three million students pursuing graduate work in the U.S. in the 2017-2018 school year, according to the National Center for Education Statistics. Roughly 145,000 received tuition waivers in the 2011-2012 school year, the last year for which statistics were available, according to the American Council on Education.

If the House provision passes, anyone getting their tuition waived in lieu of a paycheck could see taxable income rise dramatically, and be on the hook to pay additional taxes. How much will vary by student, but larger tax bills will mean education itself will be a more expensive proposition. And graduate school tuition is not cheap to begin with, often costing tens of thousands of dollars. Annual tuition and fees at Harvard’s Graduate School of Education, for example, is almost $47,000 this year. And that’s not counting living expenses.

The prospect of larger tax bills has caused students to protest, and more than 3,000 have signed a petition asking Congress not to tax tuition waivers. They argue that taxing tuition waivers will have a major impact on the decision to pursue education, and on the universities, too. As a group of UCLA students wrote on Scientific American’s Observations blog, “graduate students serve as the bedrock of research at higher education institutions.”

Whether you support this particular provision in the House bill or not, the idea that these students have taken notice and spoken out on it is a good thing. Everyone should be watching the tax bill. There’s a good chance it will impact you directly.

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