Tax on tuition waivers, assistance would make graduate school unaffordable to many
After a year of attempting various controversial legislation — immigration, the travel ban, the health care debacle — the House Republican party has wheeled out its latest project on the docket: a tax bill that would be disastrous for education at all levels.
Its effects would include taxing the endowments of private colleges, allowing parents to use 529 plans for K-12 private schools and scrapping the $250 deduction that teachers can use to offset out-of-pocket cost of classroom supplies. The Editorial Board takes particular issue with the bill’s proposal to count tuition waivers and assistance as taxable income.
Under section 117(d) of the current Internal Revenue Code, graduate students can potentially receive untaxed tuition waivers. Over 172,000 students currently benefit from this provision, which makes graduate education slightly more affordable and partially compensates graduate students for the teaching and research work they do for the university, often for meager stipends. The tax bill in the House would remove this provision and tax the value of tuition waivers as earned income.
There is a world of difference between tuition waivers and income. Taxing tuition waivers in the same way as general income is an astoundingly bad-faith interpretation of what income means. It’s particularly malicious coming from a party that’s seemingly hell-bent on slashing taxes for corporations and the wealthiest people in the nation.
This tax could push students out of graduate school. Speaking to Inside Higher Ed, one student said that her taxable income would more than double. Another said, “That would push us to the poverty line.” No part of squeezing every last penny out of graduate students is fiscally responsible. Nor is it a break for the middle class, a popular selling point for any and all tax proposals.
Any person, organization or political party that paints affordable higher education as a problem is one that does not have the best interests of the American public at heart.
Students and scholars flock to the U.S. from across the globe to learn and teach in our institutions, which are some of the crown jewels of American achievement. A college education has been one of the hallmarks of the American Dream since the term was coined.
If the House bill passes, it would strip students of the assistance that allows them to continue their studies, making graduate education more unaffordable than it already is. Taxing tuition waivers as income would blow a hole in the side of graduate education. It would also, by extension, wreak havoc on undergraduate education, as undergraduates would be robbed of teaching assistants and graduate instructors. It could devastate American research and innovation. It would undo decades of work that have gone into making graduate education affordable and expanding access to the halls of academia. In short, The Editorial Board believes the proposed legislation is a disgrace.
Written By: The Editorial Board