New tax reform bill threatens to increase costs for graduate students

A new tax reform bill in the U.S. House could increase tuition costs for some grad students by 300 percent

On Nov. 16 the U.S. House of Representatives voted 227-205 to pass H.R. 1, known as the Tax Cuts and Jobs Act, a tax reform bill that could take away many of the waivers and course reductions that graduate students rely on to help pay for their education. 

Waivers are discounts on tuition that are offered in exchange for working for the university, often as teaching associates. Those waivers, along with course reductions that reduce the cost of courses for graduate students, have not been considered taxable income under Section 117 (d) of the U.S. Internal Revenue Code. That would change under the House Republicans' plan.

Graduate students argue that this creates a considerable problem. If a graduate student makes $15,000 in income and has waivers for $30,000 to cover tuition and housing, the student would then be taxed for making $45,000 a year. 

The Graduate & Professional Student Association at ASU sent some of its leaders, including President Samantha Hernandez, to Washington D.C. to address Arizona representatives about the effects this bill would have on graduate students. 

"If we don't have those tuition waivers put in place, all of the sudden we're having to pay for school," Hernandez said. "What that would mean is that most of us would have to get a second job. Or in some cases a third job." 

As a teaching associate at ASU, she and 3,900 other graduate students would be directly affected by the Tax Cuts and Jobs Act.

Leaders of the GPSA met with representatives in D.C. to try to get the bill changed, Hernandez said. However, those changes would have to be made when both the House and Senate pass the bill and form a joint committee to address the differences. The Senate version of the bill, which passed through committee on Nov. 16, would not include waivers and reductions as taxable income.

Not changing the House bill could lead to major issues for students trying to afford housing and go to school, said Alyssa Sherry, a fourth-year doctoral student studying chemistry. 

"This is my main source of income, my really only source of income," Sherry said. "And living in Tempe on 20 grand a year after taxes, is already hard enough, but then you add on the extra $3-$4,000 that I would have to pay and all of a sudden I'm trying to live off $16,000." 

Sherry has her entire tuition covered by waivers, and she works as a teaching associate as part of her degree program. 

The GPSA has created a calculator to show how much graduate students would have to pay if the waivers and reductions are taxed. 

"I think what you may see as a response is that institutions can easily get over this by, instead of offering this as a tuition waver, they offer it as a scholarship," said Mark Wiederspan, economics professor at the Mary Lou Fulton Teachers College.

This could shift the cost of graduate degrees to the University instead of the federal government, but it remains to be seen whether the University would take up the challenge of helping students. The GPSA issued a letter to ASU President Michael Crow in regards to the Tax Cuts and Jobs Act. They asked him to make a statement regarding the plan and to share their concerns. Crow said on Nov. 14 that he would soon release a response.

"Anybody who has a stake in higher education should reach out to their representatives and let them know how this is going to affect them," Sherry said. "And that goes for graduate students, for their advisors, undergrads who we teach in the lab or in the classroom on a daily basis"


Reach the reporter at cbudnies@asu.edu or follow @ChaseHBudnies on Twitter.

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