University of Michigan can afford to pay its grad students enough extra to cover the tax. Other schools can’t.
Scholarships.
Aren’t scholarships going to be taxable? No?
That’s the point. Scholarships would be taxable income.
CF, sure but that doesn’t mean they will. Departments get x amount of money and there are certain departments (like mine) that are pretty skimpily funded compared to others.
I only use U of M because I know the concrete numbers. Like usual, smaller, less-endowed schools will be the ones screwed the worst.
A scholarship used for tuition is NOT taxable.
^^correct.
Merit scholarships are still tax-free. Let’s not conflate the issue.
It’s the tuition remission for being a TA that will become taxable. (In reality, being a TA is a job with ‘income’ anyway. If it was not, Grad Students would not be able to unionize – I think.)
That is what the current law says. So you are saying it will stay the same under the proposed plan?
^^yes, I have seen nothing that says merit scholarships will be taxed. If so, that would affect undergrads as well as anyone in grad/professional school who receives merit/grant money.
^^^ not yet.
Right. But those who say on this thread that the tuition waivers for PhD students SHOULD be taxable are being inconsistent. All these things (merit aid, tuition waivers for grad students, need based aid) are really quite similar – they are price breaks from tuition (and sometimes room & board). Why should just the tuition waivers for the PhD students be subject to being taxable, but not the other two? Maybe they didn’t do that because PhD students are a smaller pool, and they think they can get away with it. I don’t believe any of the 3 should be taxed – but I’m just pointing out that some people on this thread are being inconsistent.
The obvious answer to this is undergrads do no work for the university in exchange for the merit and need based aid, so it is best viewed as a gift. Waivers for Phd students are almost always contingent upon performing the job duties of a TA/RA, and so are best viewed as a fringe benefit of a job. Gifts and fringe benefits have different tax treatment. Whatever you think of the rest of the tax plan, it makes no sense that tuition waivers for Phd students were ever tax free.
fwiw: I have seen anyone on this thread that says tuition waivers should be taxable. Some of us are just trying to explain the nuance of the proposed tax law. (But given intparent’s post above, obviously doing a poor job.)
Need based aid, like merit aid, is free money and does not have to be paid back. No one has to work to receive it – just be breathing every day (and remain in good academic standing). In other words, no work involved.
Tuition remission in lieu of pay for being a TA is quite different. It’s a Uni ‘paying’ a grad student with tuition remission dollars for work as a TA as opposed to real cash, which would be income if the Uni had to cut a check to the TA.
according to the Chronicle of Higher Ed:
emphasis added
What are all the universities who rely on the cheap labor of TA’s to teach undergraduates going to do?
And you don’t think undergrads are providing some service to the university, especially for merit aid? Their higher test scores, for example, are a marketing tool for the university. And if you want to use this standard, then I’m pretty sure athletic scholarships should be taxed, because athletes are REALLY working for the university.
Good question, @emilybee, especially the majority of the universities that don’t have big endowments. Real answer is probably that they will do nothing the first year, really too late – TAs and RAs already are set for at least winter semester, and universities just won’t react that fast. So TAs and RAs will either take out loans or ask their parents for money, I’m guessing. You really can’t take a second job while you are an RA or TA, they want all of you…
Eventually colleges will need to make choices. Some options are:
- Up the salaries of the TAs/RAs to cover the tax burden. Probably this will result in fewer offers of TA/RA positions (fewer PhD students), since the pool of money departments have is static or shrinking. That means class sizes will go up for intro sections taught by TAs (meaning more work for the TAs for no additional real salary -- they will have more students to meet with and grade for).
- Or come up with additional funds to pay TAs/RAs. Since government grants and state aid aren't growing, that means -- higher tuition for undergrads. Yay!
- Or no adjustment by universities, and being a PhD student becomes just the province of wealthy families where parents can afford to subsidize the development of our next generation of researchers and profs. Universities that don't adjust will be at a steep disadvantage to bring in PhD students at all.
- Or no adjustment (or only partial adjustment), and grad students take on loans/debt throughout their 20s to help move human knowledge forward and prepare for careers in research or academia. Those aren't always the best paying careers to start with. Possibly some promising students will decide it isn't worth it financially.
It turns out the tax proposal takes away your and my ability to deduct state and local taxes, but guess what? It does not take away a real estate developer’s ability to deduct state and local taxes.
Yep, under this proposal people who get passthrough income can deduct state and local taxes, but regular people who work for a living can’t.
@“Cardinal Fang” I’m shocked, said no one
Another thing of note: we have to be enrolled at least half-time throughout the entire PhD program. So I’m enrolled full time even though I’m not taking any classes. This is how we keep health insurance and why my loans aren’t due yet.
Also of note, we had to strike this year for the U to even compromise on a 3% COL income increase despite the fact that the COL in Ann Arbor grows by much more than that every year.
So even though the U can help us cover it, that’s no guarantee they will.
Also: we get tuition remission when we’re on fellowship. Is that taxed, too? If not, that seems like a bizarre distinction because at least here, the perks, income, and everything else is exactly the same whether you’re on fellowship or GSI / GSRA (TA / RA)
great question, romani. But it might be school-specific.
For example, at my D’s Uni, her grad policy says: Fellowship stipends are financial aid, not salary. No service is expected in return for a fellowship; it is awarded on a merit basis to assist a student in the pursuit of a degree.
I would think that the bolded is key for the purposes of the proposed policy. (But just a guess since it will all change before anything is enacted.)
fwiw: I do not know how D’s Uni handles TA’ships. (She’s a second year, and has not had to TA yet.)