House GOP Tax Bill Would Significantly Increase Grad Students’ Tax Burden

On Nov. 17, the U.S. House of Representatives voted to overhaul the U.S. tax code. The vote – which largely went along party lines – has a number of far-reaching consequences, notably for graduate students.

A good chunk of graduate students pursuing doctoral degrees receives some form of tuition waiver, meaning that the university discounts or waives tuition for a doctoral student in exchange for some form of labor (typically a teaching or research assistantship). In the 2011-12 academic school year, the proportion was around 25 percent. Under current tax law, the value of that deduction or waiver isn’t taxed. Under the new U.S. House tax bill, however, it would be. That means if a student were to receive a tuition waiver valued at $50,000, that amount would be taxed as income.

Graduate students argue that this will make life much more difficult, especially given that the new plan will dramatically increase their tax liabilities. Given that many graduate students already struggle financially on meager stipends, many argue this will deter people from studying in the U.S.

This plan is going to be disastrous for higher ed,” Jack Nicoludis, a Harvard graduate student studying chemistry, told NPR, explaining that it would nearly double his current tax bill. “Graduate students already struggle to get by, and this will just be another factor that dissuades people from getting PhDs.”

The House tax bill also eliminates several other tax deductions and credits that benefit students. For example, it axes the Lifetime Opportunity Credit, offered to students enrolled in higher education for over five years, and also eliminates the student loan interest deduction, which allows students to deduct the interest they’ve paid on student loans from their taxable income.

It is true that the bill does double the standard deduction offered to taxpayers, which, in theory, could offset some of the losses incurred by taxing tuition waivers. But it is unlikely to offset the entire loss of the waiver for students, as the value of these waivers typically far exceeds the $12,200 standard deduction. According to calculations done by the American Council for Education, the various changes the bill makes to the tax code would increase the cost of education for students by more than $65 billion by 2027.

On Nov. 29, graduate students at more than 40 universities across the country walked out of their classes to protest the plan.

Although the bill has passed in the House, the version of the bill that is currently in the Senate doesn’t have the provision on graduate tuition waivers. If this version of the bill does pass in the Senate, then the two different versions will need to be reconciled – and it is unclear what will happen with the tuition waiver provision.

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