Did your school give you tuition remission AND a stipend? And health insurance? Many PhD students receive a decent stipend…plus benefits.
BUT at some places ALL you get is a tuition waiver.
(It was a long time ago). I got what was a modest stipend for the Bay Area (Stanford) + tuition + health insurance. Health insurance was commonly part of college/grad school back in those days (the 80s). There is no way I could have afforded taxes on a Stanford tuition with that stipend. I was living month to month as it was.
Yes…and most doctoral and professional students are still loving month to month…or are taking out loans to pay the rest of their expenses.
It’s disgusting to me that these tuition waivers will be taxed as income…but there will be breaks for private jets, golf course maintenance, and a huge reduction on inheritance taxes. Huge.
Regardless of how this part of the bill is justified politically, the bottom line is that grad students simply won’t be able to pay.
Isn’t it strange that someone who finds paying 70k out of a 280k income impossible, would expect a student on a 25k income to be able to pay 7k in taxes.
(To me, the first is difficult, the second impossible - but I see how you could argue they’re equally difficult…However I dont see how you can find the first unfair and the second fair).
Also, how will the grad exchange TAs be treated? Will they be tax exempt? What about international students with tax reciprocity exemption - imagine if it becomes easier for a European to attend grad school in the US than for an American?
I’m also thinking of the worldwide competition for grad students - I see other countries and their grad schools licking their lips.
Another point is that if the tuition waiver is taxed for graduate students, how long do you think it’ll be till tuition scholarships for undergrads are taxed, too?
In addition, the bill apparently cuts all kinds of educational expense credits.
This isn’t impossible. Otherwise, it wouldn’t be possible for anyone to live on 18k take home pay. In the bigger picture, MBA students, law students, and med students generally don’t try to pay for all their expenses, including tuition, out of current income either. Yet, many people still go to law, med, and business school.
For the most part, Professional school students rarely get tuition waivers for research/TA’sing. Professional students just live off of a combination of 1) family money; 2) personal savings from prior work; 3) grad+ loans. If they do TA a class, they are generally paid a taxable cash stipend, or offered course credit.
Not sure that the slippery slope argument works here. Similar to undergrad merit scholarships, Grad Fellowships that ‘pay’ for tuition are still tax free.
My daughter doesn’t see her fellowship. That money goes to her lab.
^^that’s an internal bookkeeping issue, snowball.
Regardless of where they ‘money’ ends up, the Uni is still allocating it towards your D’s tuition. You may be able to check the school’s website to clarify how it is treated.
My D’s grad school is quite clear on their site. To paraphrase, a named Fellowship is tax-free.
My kid is in the first year of a program with an average length of 6.8 years. And it is a bit of a “pull up the ladder behind me” philosophy to just push this out to future students, but let our students who are almost done get through. I do think it would give colleges a bit of time to rejigger their accounting if they can find a legal way to do it. But I’m under the impression that this congress and WH don’t have any interest in making things easier for universities and college attendees. And putting off the changes delays their calculated revenue, so they can’t give the planned tax cuts to corporations. And they certainly don’t want to do that due to the pressure they are under from their donors. The root of this is very much big money & corporate money in politics.
I’ll be here until 2021/22 and I’m already halfway through
My son is in his first year in a phd program. His stipend is a little below 29k. He also has a fellowship of 6k paid directly to him. His tuition waiver is 43k. His taxes would increase to 11k. Ouch.
@roethlisburger
Yes, but those programs are usually much much shorter and the payout is almost guaranteed right after graduation.
So tell me…how does my professional School kid who gets 1/2 tuition waiver…and $1200 a year in “income” pay those taxes. Oh…I know…she takes out loans. Oh…and she no longer can deduct Direct Loan interest either.
It’s called…getting the shaft.
She loses her Lifetime Learning credit, too.
Isn’t the direct loan supposed to be for educational expenses though?
Anyway, who in their right mind borrows money to pay taxes? Is that seriously something people do? How do you borrow when you don’t have a salary, only a stipend, and aren’t legally considered employees?
That makes no sense to me.
The Lifetime Learning credit and Direct Loan Interest deduction suppression, when people who own planes and golf courses get cuts, should anger most parents.
There’s been no answer to the fact that international graduate students and exchange graduate students WILL NOT have to pay those taxes BTW.
Nor about the competition between Europe, China, Canada, and US, regarding attracting grad students, for which this law places us at a huge disadvantage.
(For the record, take home pay of 18K IS NOT livable. Only someone who is nowhere near that income level would even wonder. It’s the level of what Charles Booth and Rowntree called “hand to mouth working poor”, people who can barely subside, have to choose between paying heating or rent, are at the mercy of an illness, etc., which 20th century policies were supposed to have decreased if not erased from memory.
@romanigypsyeyes might have things to say to those who think it’s ok to have 18K take home pay to live on.)
That is a good point. Will grad students even be able to borrow to cover this tax bill? Maybe only from private lenders, and they all have so much income and so many assets. This is just crappy.
My kid is not getting full fundiing…or any additional stipend…except $300 a month for four months a year. The kid is getting a half tuition waiver…and nothing for living expenses. The kid CAN take an additional Direct Loan for these additional educationally related expenses.
But regardless. This is a sickening way to generate money so that the wealthy and big business can have tax cuts.
And plenty of PhD students do not get stipends that fully fund their full cost to attend the programs where they reside,
My general point is that grad students will not be able to pay these extra taxes. They just won’t have the money.
I can’t think of how they’d get a loan to pay taxes (I don’t think they can get the direct loan for that and I can’t see any bank willing to lend them money to pay taxes. The whole idea of a loan to pay taxes sounds bezerk to me.)
I don’t know what they’ll do. Perhaps wait and not pay, and see if a new law is passed. Or move to another country. I have no idea. It just makes no sense to expect them to pay money they don’t have at a rate higher than milionnaires.
I don’t understand why parents aren’t angrier about this.
And remember, this will apply to American students, but not international exchange grad students (who won’t be there to pay taxes since they only stay a semester or two) and not to international grad students who have exemption reciprocity with the US (most of Europe, for one).
Students can take Direct Loans for any amount that is included in their cost of attendance. So…if they have not taken the full amount…they can do so…assuming their cost of ttendance has not been otherwise met.
My kid did NOT take a full Direct Loan this year…and still has some eligibility for that left…as this kid did not receive aid that would cover the cost of attendance…at all.
It was a choice made when the loans were disbursed. She took 1/2 of the amount offered…so can take an additional amount if needed.
The school also gave her a small scholarship. I wonder if they can convert the waiver amount to a scholarship…or even a need based aid grant. EFC is $0.
I told Mr R only half jokingly that we had to hurry up with that baby thing so that we can afford our taxes.
(Yes, I know that a baby would cost more than the tax break.)