The bottom line here is that the students from the low income families are the ones are vulnerable to a sharp spike in tax rates. For most students, due to the $12,000 standard deduction vs $6K under the old law, they will be taxed less or just a bit more. Using the old Kiddie tax rate, those kids from low income families were taxed less on the excess since their marginal rates were lower than high income families’ marginal rates.
Now that excess might be less under the new larger standard deduction but that whopping 37% tax rate for everyone means that the low income kid gets a sharp increase once that income hits a critical dollar amount. That amount can get up there since it includes true earned income, not just scholarship money. That last year in school ending at graduation could bring in a lot more $12k. Kid still a dependent.
It’s not just scholarship kids affected. I have one who just graduated. Room and board Stipend. Worked a few hours a week this last semester. Has a job that will be netting him a good salary this year. He’s my dependent. He’s going to be owing a lot more in taxes from that 7 month job than standard withholding tables will show.