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Thursday, 07 December 2017 06:20

House Tax Bill May Force Many Graduate Students to Drop Out of School

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graduateschoolphotoGOP House would have graduate students subsidizing tax breaks for the wealthy. (Photo: Kevin Harber)

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The Senate and House versions of tax restructuring bills still need to be reconciled in a conference committee, but both pieces of legislation clearly favor shifting tax deductions toward the wealthy. However, there are different provisions in each bill that create particular winners and losers. For example, in the House version, graduate students would get the shaft by having tuition wavers taxed. 

It's hard to believe that elected officials in Washington, DC could think of a more perverse way to diminish the nation's knowledge base. Given the often marginal incomes of graduate students, it is likely that many students would forgo graduate school rather than assume the significant additional financial burden of taxed tuition waivers. A recent article in Inside Higher Ed, which notes that many students are protesting the bill, explains this likely impact:

"If it’s filled with any, or most of, the provisions aimed at higher ed, then I’ll have to drop out of my program," said Tom DePaola, a doctoral candidate in education policy at the University of Southern California....

"I was really brought out here [to protest in Washington DC] when I saw that they were going to tax our tuition waivers as income," said Skyler Reidy, who is pursuing a Ph.D. in history at USC. "It’s going to force people out of grad school."

The Inside Higher Ed report also showed how other provisions in the House bill could negatively impact higher education and individual graduate students over the long term. Consider that the bill limits tax deductions for state and local property taxes to $10,000. This, in turn, would put pressure on taxing authorities that fund public higher education to lower property taxes. The consequences could be decreased subsidies to higher education. As the article quotes,

“What we’re really seeing is a targeted effort by the GOP to not just attack education, but working-class students’ access to it,” said Laura Jaramillo, a doctoral candidate at Duke University’s program in literature.

Overall, an article in CNBC predicts, the House tax bill "would reduce tax benefits and savings for all college students by $65 billion over the next 10 years." This includes reductions in student loan interest tax deductions and student loan forgiveness. The student loan interest deductions are taken by more than 12 million tax filers annually, according to CNBC.

Thus, the House bill taxing of graduate tuition waivers appears to be just the tip of the iceberg in an assault on higher education -- one that will particularly impact students with limited funds. The plight of graduate students becomes clear in a New York Times analysis of how the House bill would impact one student. According to the Times,

For Dacen Waters, 26, who is in his fourth year of pursuing a doctorate in physics at Carnegie Mellon University, the House bill would impose about a $7,000 tax increase.

In Mr. Waters’s program, the Mellon College of Science grants students an annual stipend of $29,400 and a $43,000 tuition waiver. Under the current proposal, their taxable income would rise to $61,000 from $19,000. That would effectively cut students’ net stipend by nearly $10,000 a year.

The Times also notes that "more than 60 percent of the [approximately 145,000] students who would be affected [by taxing graduate tuition waivers] are in science, technology, engineering or mathematics." If the House bill provision clears the final conference committee, the brain trust of the nation in critical fields will be impeded.

Of course, the taxing of graduate student waivers will not impact the offspring of the wealthiest Americans, whose parents can afford to pay the increased cost of their children attending graduate school. Since the bill overall most benefits the richest in the United States, the graduate school tuition provision will doubly benefit those with the most economic means. Meanwhile, many of those students who don't have the financial ability to afford soaring graduate school tuitions will choose alternative career paths that they can afford.

On Wednesday, November 29, graduate students held a day of protest against the House provision. There have been other activist efforts against taxing graduate school tuition waivers, such as a sit-in outside of Speaker of the House Paul Ryan's congressional office. Graduate students shouldn't be the only ones protesting the House provision that impacts them. After all, they are an investment in the future of this country.