Negotiations in Washington D.C. over the outcome of the current GOP tax bill are hitting close to home for current and future graduate students on campus. Provisions in the version of the bill passed by the House of Representatives would eliminate a tax exemption that saves many graduate students thousands of dollars.
“We just wouldn’t be able to afford it,” said Evan Carter M.A. ’18, referring to his and his wife’s ability to pay for their master’s degrees if such a provision became law. “And that’s the truth.”
As a part of the University’s financial package, graduate students can receive full remission of their tuition for up to eight credits per academic year. Since graduate students can take only a limited amount of credits, all graduate students can attend the University without paying tuition. Additionally, students who act as teacher’s assistants are provided a stipend to pay for their costs of living, providing students with a generous package rare among competing institutions’ master’s degree programs. Carter and others have not had to pay particular attention to the cost of tuition because of the remission.
“I’ve never looked at what my tuition would be normally,” Carter said. “I’ve never thought about it.”
Carter noted that he believes this system serves an important purpose.
“I think one of the reasons why grad students are paid like a job is that when we get out, we’ll directly contribute back to the country as engineers, research scientists, or academic professors,” Carter said.
Under current law, these tuition waivers are untaxed. But under the tax plan that passed the House of Representatives last month, these waivers would be considered as income. This key change means money that graduate students never see would be subject to income taxes.
This change has not yet been passed into law. The version of the bill passed by the Senate did not include such changes to how tuition waivers are taxed. This means a conference committee consisting of Republicans from each chamber will now hash out the differences between the bills and determine the final version of the bill. This final version would then be subject to a vote by each chamber in order to pass.
Absent tuition waivers, tuition for graduate students at the University is $6,521 per credit. This means a student taking four credits each semester receives $52,168 in annual waivers.
Using a calculator created by two Ph.D. students at UC-Berkeley, a graduate student taking four credits each semester—earning the $31,794 stipend for work as a teacher’s assistant and paying $1,963 for the University’s health insurance—would stand to see a tax increase of $9,838, or 359 percent. This comes out an effective tax rate on their stipend of roughly 31 percent.
While taking four credits is typical of graduate students in their first year and Ph.D. students later in their track, the bachelor’s and master’s students often take fewer credits. A graduate student attending the University under the similar circumstances but taking three or two credits each semester would stand to see a tax increase $6,578 or $1,409, respectively, according to the calculator.
A combination of the University’s generous tuition waiver policies and relatively high tuition rate translates to a graduate population at Wesleyan that stands to lose disproportionately more than students at many other institutions. Public schools typically have lower tuition rates and rarely provide tuition waivers for master’s degrees. The same calculator found that a Ph.D. student enrolled at UC-Berkeley would see a tax increase of $1,385. A Ph.D. student at MIT would see a tax increase of $9,584, similar to a graduate student at Wesleyan.
Many other universities’ master’s programs do not provide tuition waivers, making Wesleyan attractive for those without the financial means to cover the costs of tuition.
“Attracting future students who do not have independent means will be difficult,” wrote Cheryl-Ann Hagner, Director of Graduate Services, in an email to The Argus.
Carter sees the tax increase as an assault on higher education in America, noting that a generation of students pursuing higher education would be quickly affected, and potentially diminished. He also views this as a precursor to the hampering of the quality of the University’s graduate degree programs.
“[The astronomy department’s] idea with the graduate program is specifically to attract students from non-traditional backgrounds who may have ended up with a bachelor’s and otherwise may not have the means to pursue it and to keep those students in the field of astronomy,” Carter said.
This could mean a composition of graduate degree programs that are less socioeconomically and racially diverse.
“A narrowing of perspective is the opposite of what research institutes need,” said Jerry Lee, who is seeking a Ph.D. in biology at the University and has been keeping the Graduate Student Alliance informed of the changes in the bill.
Rep. Kevin Brady (R-TX), sponsor of the bill and the chair of the conference committee, defended the provision in a speech at the American Enterprise Institute as ensuring fairness in the tax code.
“If you’re a grad student…and you get tuition assistance from the university, it’s tax free,” Brady said. “But if you’re that same student pursuing that same degree, but working across the street at a company trying to earn the money for that tuition, working hard, well you’re taxed for every dime of it.”
At the same time, Brady left open the possibility the tuition waiver income tax could be absent from the final version.
“We’re listening, we’re hearing from lawmakers that this provision at the university level is an important one,” Brady said.
Political advocacy against the provision has begun on campus, both from the administration and among students.
“Wesleyan reached out to the Connecticut delegation and Senator Michael Bennet [’87] in Colorado, a Wesleyan Alumnus,” Hagner wrote.
The American Council on Education (ACE), the leading lobbying group for institutions of higher education of which the University is a member, is lobbying against the provision in addition to other elements of the bill.
“It is possible to offer tax relief to hard-working middle-class and lower-income Americans in a way that does not increase college costs and does not make a quality higher education less accessible,” a letter from ACE’s president Ted Mitchell to Speaker Paul Ryan and Minority Leader Nancy Pelosi reads.
On campus, Lee coordinated a phone bank ran by the Natural Sciences and Mathematics Coalition, an amalgamation of undergraduate on-campus groups aimed at enhancing diversity in STEM fields. The calls expressing opposition to the provision were directed at senators across the country.
“This bill impacts both current graduate students and undergraduates aspiring to apply to graduate programs,” Lee said. “It makes sense to work as one.”
“Adding a financial tax burden to graduate students who spend years working long hours on low income with uncertain future job prospects will not encourage future scholars to pursue this path,” Hagner wrote in a statement on the effects of the bill. “The potential loss of benefit to Wesleyan and the greater society of the advanced work of graduate students is immeasurable.”
Mason Mandell can be reached at email@example.com or on Twitter @MasonMandell.