Is that for college courses, or for in-house training?
My view on this is because it is easier to tax grad students because there are fewer of them. If you tax all undergrad scholarships, that includes every student who is getting a scholarship at a community college or from a state directional or $500 from the local Rotary club. And THAT would make the average voter a lot more angry. But PhD students – well, that just plays into all those “elite college” snide remarks that the politicians who just passed with bill have been making. Even if it does whack their own state universities – they have done a craven calculation and decided the swipe at higher education was in their favor.
I am even more cynical about this. I think the donor class and the legislators’ children are more likely to pursue law degrees and medical degrees where tuition waivers are less common.
Re tax-free company education being limited to $5250 per year, @sylvan8798 asked:
I am not an accountant, but I suspect that in practice it only applies to external education courses applicable to any future job, not just your current job.
For example, my wife’s career requires her to have several thousands of dollars of external continuing education courses every couple of years. Because that is required for her current job, the issue of an annual education limit has never come up with our accountant.
Enormous amounts of on-the-job training goes untaxed. Apprentice plumbers and electricians get valuable training that they don’t pay taxes on. Junior associates at law firms get in-house training that they’re not taxed on. These sorts of training programs are immensely valuable to the employees receiving the training, but they’re not touched by the current tax bills.
You can argue there’s a difference: the training junior plumbers, electricians, and lawyers get makes those individuals more valuable to the employers providing the training. That’s also true of Ph.D. candidate TAs and RAs, but they’re expected to leave in a few years–in fact, they’re required to leave in a few years–so arguably the greater value of the arrangement falls to the grad student, whereas for the apprentice plumber, electrician, or attorney it’s more like a 50-50 proposition. But that’s only because the Ph.D. students are students first and foremost, and only incidentally employees. You would think that would make them less appropriate targets for taxation than apprentice plumbers, electricians, and attorneys, who are employees through and through. Unless the goal is just to kill off graduate education in this country, which seems a little like shooting yourself in the foot with a howitzer. But then, there’s a lot about the corkscrew logic of the authors of the current tax bills that I can’t begin to comprehend.
Does anyone know if the taxing of tuition waivers would also apply to tuition exchange benefits of employees of colleges and universities?
@ProfessorMom1 there WAS something in one of the iterations of this tax reform that DID tax tuition exchange benefits.
At this point it’s a moving target.
@thumper1 I found this article, which does say the House version would tax tuition benefits for employees (as it would grad students). https://www.nytimes.com/2017/11/15/us/politics/house-tax-bill-higher-education-increases-tuition.html
Lovely…not!
This is not the argument you want to make.
The tax treatment of employee training has always been consistent. If the training helps you perform your current job better, it is untaxed. If it is general training that can help you at a new job, anything beyond $5250 per year is taxable. And apparently the new tax proposal reduces this to zero.
Given that the entire purpose of a PhD student’s classes is to prepare them for life after the PhD, consistent tax treatment would imply that the tuition waiver should be taxed.
@ProfessorMom1 The House bill taxes tuition benefits paid by university to employee as income to the employee while the Senate bill does nothing on tuition benefits.
Our university is a major employer, and many people take jobs there in order to qualify for the tuition benefit, including dining hall staff, maintenance etc. To suddenly tax that benefit will change a lot of people’s college planning. It will be a huge challenge for us for the remainder of college kid’s career as having to cover those taxes will wipe out the cushion of college savings we had to cover other college expenses. At this point, I’m just hoping the House passes the Senate bill – which would mean tuition benefits are not subject to tax, but there still is not much news out of DC about what is actually happening as they try to reconcile these two bills.
As I’ve said before, if this goes through and the U can’t figure out how to deal with it, almost my entire department of grad students will leave unless they’re on fellowship and in their dissertation stage.
The problem with this logic is that PhD students are not primarily employees, they are students. Why not apply this to undergraduates who work as Resident Assistants? They are employees of the school who are getting massive financial aid benefits that prepare them for life after their degree. Do we want to start taxing financial aid and merit scholarships, but only for those who are working for the school (usually those most in need of money to attend)?
Regardless of consistency, the taxation of training given to employees (primary or secondary) of any field seems precarious at best given that no actual money is being exchanged yet these employees could be forced to pay taxes in amounts that they very well not possess.
I agree with PengsPhils. Ph.D. students are students, first and foremost. The tuition waivers they get are a form of financial aid, without which very few of them could afford to attend grad school. Schools might be able to get around this proposed tax by offering all Ph.D. students full-tuition fellowships whether or not they teach, then offering additional salaries to those who elect to work as TAs or RAs. My guess is most grad students would take the TA and RA jobs because they need not just the tuition relief but also the cash income, and also because they need the teaching and research experience and the close ties with the faculty with whom they work, who can help give them entree into the next level of their academic and professional careers. But it wouldn’t fundamentally change the nature of the relationships, and it’s ridiculous to make the universities jump through these hoops on the misguided premise that tuition waivers for Ph.D. students are primarily a form of compensation for services rendered. That’s just hogwash.
Ask any faculty member who supervises grad student TAs and RAs whether they view their TAs and RAs primarily as employees or primarily as students, and I guarantee they’ll say it’s as students. The TA and RA work they do is valuable, indeed indispensable in some programs and in some settings. But it’s incidental, not the primary driver of the relationship.
FWIW, I know that to the U, I’m a student. But to me it’s my 60+ hour weekly job.
Don’t need to. Their answer would be obvious: ‘keep the grunts under our thumbs!’.
But clearly, the NLRB has ruled otherwise. Per 2016 ruling:
“In their broad-based decision, the NLRB swept aside decades of earlier history and basically said that any student who does either research or teaching in a private-sector institution will be considered a school employee entitled to be represented by a union,” said Joseph Ambash, a Boston lawyer who helped write a brief filed by several prestigious universities arguing against a pro-union decision."
btw: I don’t see how grad students can’t have it both ways. Can’t demand to be an employee for purposes of unionization but then claim generic student for tax purposes.
btw: there’s a possibility that the issue gets dropped during reconciliation:
https://www.insidehighered.com/quicktakes/2017/12/08/house-republican-opposes-grad-student-tax
I don’t dispute that in their TA and RA work grad students are employees, and I support their right to fair compensation for that work, including the right to unionize and to bargain collectively with their employer. But I think they are, in fact, two things at once: students first and foremost, and employees secondarily. Just as an undergraduate who works for the college in a work-study job is both a student and an employee. To think the financial aid they get as students is just an employee benefit is completely wrong-headed.
Look, the university doesn’t post job openings for TAs and RAs and then explain to applicants that one of the benefits of the job is a tuition waiver if they want to pursue a Ph.D. That would be an employee benefit. Instead, it admits the graduate students it wants as students in its graduate program, and only then does it offer them ancillary jobs as TAs and RAs.
I saw that Pete Sessions was going to bat on this. I looked at his website and found that I disagree with him on literally every other political issue. But even a blind pig finds an acorn sometimes. I hope he succeeds.
Susan Collins is under huge pressure to withhold her vote because of the ACA change – I could see her joining Corker.
This is now one of my new favorite sayings.