Graduate students in the U.S. are fighting the House Republican proposed tax plan, demonstrating protests and walk-outs in more than 40 universities across the country on Wednesday, November 29.
The current bill, which passed the House this month, includes a provision that would turn tuition waivers into taxable income. Students and economists alike state that such a provision would make continuing education unaffordable and inaccessible to many.
For many students pursing a PhD, tuition waivers and stipends are essential in making such a degree affordable. In return for taking up a position as a teaching assistant, fellow, or as a research assistant in a lab, graduate student receive a small stipend to support themselves, which Forbes estimates falls anywhere between $20,000 and $30,000 per year. Additionally, students receive tuition waivers ranging from $12,000 to $50,000 per year (depending on the university), which are paid directly by the university to the university on the student’s behalf. While students pay taxes on the stipend, the tuition waiver is non-taxable income that never even passes through the student’s hands.
The new GOP tax plan could change all of that.
The National Center for Education Statistics estimates 3 million students pursue advanced degrees ever year, the overwhelming majority of which are in the STEM fields. Tuition waivers play a vital role, specifically to the majority of students who have not yet developed personal wealth and have accrued debt by pursing an undergraduate degree. If the provision of making tuition waivers taxable income passes in the final version of the bill, taxable income for graduate students will rise dramatically while actual stipend income remains the same.
This from Forbes:
Despite earning $23,000/year, you’d pay taxes on $40,520 or $57,914 at a public University, and despite earning $32,500, you’d pay taxes on $81,440 at a private University. For this last figure, this would result in a higher tax rate than anyone else in the nation pays.
Forbes estimates that under the new tax plan, a graduate student earning the basic stipend could be in a tax bracket that ranges anywhere from 17% (for public universities, in-state students) to 41.9% (private universities).
As advertised, the new tax plan (for a single filer, which encapsulates most graduate students) claims that your tax bracket is 0% on the first $12,000 of income, 12% on the next $33,000, and that you don’t get into the 30%+ range until you’re earning more than $200,000. But effectively, all graduate students not only pay far more than that due to this punitive and unfair accounting, but the Princeton graduate student pays a higher percentage in taxes than any millionaire or billionaire in America.
According to experts at the Urbana-Brookings Tax Policy Center, “graduate students and workers attending school part-time could see the largest tax increases,” under the House plan.
While this provision passed in the House, it is not included in the Senate tax bill. If the bill also passes the Senate, Republicans will have to come together to reconcile the two different versions.
Students at multiple universities across the country stated that the walk-outs were held to demonstrate the vital role they play in university life, from assisting in research to aiding in teaching.