For all the talk about tax cuts for lower- and middle-income earners, graduate students would feel the pain of a provision in the House tax bill more than most.
Problem is, under that legislation, their taxes would skyrocket on money they never even see or receive.
At issue is what’s called a “tuition waiver.” Many students pursuing master’s or doctoral degrees work for their college through teaching and other duties to earn a stipend and have a portion of their tuition waived. Money never changes hands in an agreement that benefits both students and universities.
Neither these stipends — which many graduate students have argued are inadequate — nor the waivers represent much money. In a document it sent out to students, the University of Nebraska-Lincoln’s Graduate Student Assembly estimates a typical stipend at $18,000, though they vary by department, and waivers at $8,500 (in-state) or $22,000 (out-of-state).
But taxing the waiver in addition to stipend, which is currently taxed, often bumps these students up to higher tax brackets on money that’s simply an internal accounting transfer by more than doubling their taxable income.
The Journal Star has received and printed several letters to the editor and a Local View column from graduate students illustrating the plight this would cause them. Such an action would no doubt reduce the number of NU alumni who come for an advance degree, stay in this state and start a business, creating a negative economic impact from a tax bill that’s instead supposed to benefit job creators.
These students make a compelling case. Higher education is more expensive than ever, yet those seeking to obtain advanced degrees would find the difficult road even more financially untenable than it currently is. The waivers often are a key means to making the cost attainable at all.
In Nebraska, the population of graduate students is small — but it is important. At 10,000 among the four University of Nebraska campuses, that figure represents roughly half a percent of the state’s population, though not all of the 10,000 have tuition waivers.
Nationwide, the American Council on Education noted 57 percent of waiver recipients were in the very fields of science, technology, math and engineering in which lawmakers and employers have claimed this country has a shortage. Reducing access to those degrees for the best and brightest runs counter to their stated goal.
Though both chambers of Congress have passed tax reform bills, they’ll still need to iron out differences between the legislation. Since the tuition waiver isn’t in the Senate bill, Republican congressional leadership can still strike it in the conference committee before it returns for a final vote.
Seeing as tuition waivers are a win-win-win for students, their universities and the economy, we urge them to do just that.