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Republican Tax Plan Threatens Graduate Students and Universities

WASHINGTON, D.C.—The Tax Cut and Jobs Act, the U.S. tax overhaul proposed by Republicans in Congress and supported by the Trump administration, could have serious adverse effects on graduate and doctoral students who rely on tuition stipends as a source of income to continue their education. For The Verge, Rachel Becker reports on threat to graduate and doctoral education and universities the Republican tax plan poses, estimating that, in one case, taxes owed on a $26,000 tuition stipend could double from their current rate to more $5,000 annually.

“Academic research relies on PhD students. They’re more like apprentices who teach and conduct research than like students in a school. Many are paid a small stipend to live on, and their tuition is also typically waived by their university or paid by their faculty advisor’s grants,” Becker writes. “Right now, those tuition waivers aren’t taxed. But one terse line in the proposed tax bill could change that by taxing these waivers as additional income.”

The Republican tax plan would hold more than 145,000 current students responsible for paying tax on income they don’t directly receive. More than half of graduate students nationwide made less than $20,000 during the 2011-12 academic year. After completing their studies, graduate students enter an academic job market with dwindling long-term prospects, one of the chief concerns of the ongoing graduate student unionization movement that arose in 2016.

The plan would also negatively impact universities, which risk losing graduate student faculty or increasing graduate tuition stipends, something most public institutions cannot afford to do. Many critics of the plan contend that the tax hike threatens higher education on a broader scale. “I almost get the sense that this provision with respect to graduate students was unintentional or an oversight,” said Patrick Thomas of the University of Notre Dame tax clinic. “I just can’t imagine enacting such a large policy change, that affects so many institutes of higher education without somehow talking about it. Maybe that’s me being hopeful.”

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November 9, 2017