Grad student tuition waivers should be tax-free

It doesn’t do any good right now to try to figure out what the tax reform legislation Congress is playing around with will look like when all is said and done and Republicans send their final version to President Donald Trump, mainly because there are deals to be made, negotiations to sift through, and programs to cut or fund before it’s all set in stone.


TA at Univ. of Calif., Santa Cruz, 2007 (Christian / Flickr Creative Commons)

But one part of it will affect people like me most of all—not the me of today, but the me when I was studying for my PhD at the University of Illinois. According to the Chronicle of Higher Education, the tax plan now moving forward in the US House of Representatives would make tuition waivers for grad students—which they benefit from while they work on research or teach classes for the university and themselves—taxable income.

Let’s look at this a moment: The grad students who get their tuition waived by the university would have to add that tuition waiver, which can be several thousands of dollars every year, to their adjusted gross income.

My friends in Congress need to know that those grad students never see this money. In my case, I taught a section of Biology 111, the second-semester course in college biology at the time, and served as the teaching assistant for the professor of a 300-level course in neurobiology. The biology department finance person may have transferred money into the graduate school tuition fund on my behalf (I’m not really sure how it worked or how it works), but I never saw a dime of that money. Nor do grad students who serve as TAs today. So making those grad students pay tax on the money seems unfair.

Now, if Congress wants to tax the university on money that it transfers from one department to another or reduce some of the paperwork burden this tax will add for those universities, I suppose that would be fine with the grad students, but it might make some universities think twice about handing out tuition waivers in the first place. Which might lead to grad students not being able to pursue advanced study. Which would lead to fewer PhDs in the country—not a terrible thing, by any means—but this is how it starts.

So while there will be many cuts and probably an increasing national debt with any kind of tax reform, it’s these little things that will affect more taxpayers than the big cuts. Eliminating the personal exemption is another move the House is considering for instance, according to a report in the Wall Street Journal.

The tax on grad students’ tuition waiver isn’t likely to put any of them into financial ruin, I imagine, but we need to encourage, not discourage, advanced study. And the fact that most undergrads don’t appreciate taking a class with a TA instead of a full professor doesn’t make the tax the right thing to do from a governance perspective. It’s a question of priorities—we need to ask ourselves, What are this nation’s legislative priorities?

About the Author

Paul Katula

Paul Katula is the executive editor of the Voxitatis Research Foundation, which publishes this blog. For more information, see the About page.

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