Fearing Loss Of Tax-Free Tuition Waivers, CMU Students Consider Alternatives Like Loans To Pay Taxes

Nov 10, 2017

Hundreds of Carnegie Mellon University graduate students spent hours this week calling their elected representatives asking them to oppose a provision of the Congressional House Republican’s proposed tax reform bill

If the bill were put into effect, the students say many working for the university would earn poverty wages.

Senate Republicans released a tax reform bill Thursday. Unlike the House bill, it would maintain tax-free tuition waivers for graduate students.

The House’s proposed tax reform plan would count tuition waived by the university as taxable income.

Universities across the country have been able to entice students to enter graduate programs by paying them a stipend and giving them tax-free tuition waivers in exchange for research and teaching work.

Surya Aggarwal is the Vice President for External Affairs for CMU’s Graduate Student Assembly and a fourth year Ph.D. student studying biology. He calculated the effects of the increased tax liability for graduate students and emailed that document to students this week. He said if tax-free tuition waivers were taken away, it would mean most graduate students at CMU would spend four to five months of their salary on federal taxes.

“So we would effectively be taxed on money that we don’t really receive,” he said. “And that would significantly increase tax liability for graduate students. It’s kind of ironic that this bill is entitled ‘tax cut and jobs act’ and it’s actually increasing our tax liability by about 300 percent.”

Aggrawal said students have voiced concern about being able to continue their education, some noting they would have to take out loans to pay their taxes.

Names of students who have called their elected representatives.
Credit Sarah Schneider / 90.5 WESA

Stipends at CMU vary by college. A student working at Dietrich College of Humanities and Social Science now makes about $19,036 after taxes. If tuition were counted as income, with deductions the student would make $12,949 after taxes. A full breakdown can be found here.

Similar documents are circulating in other colleges including the University of California Berkeley.

The American Council on Education sent a letter to House leaders this week saying the bill would discourage people from entering graduate programs as it would be unaffordable for too many people.

“This is not in America’s national interest,” the American Council on Education and several other advocacy groups wrote in a letter to the House Ways and Means Committee.

The President of the American Federation of Teachers, Randi Weingarten, said in a statement Monday that allowing graduate students to deduct the value of their tuition under the current tax code, “recognizes the value of their labor.”

If the House’s plan goes through with the provision, she said, “graduate education, the jewel in the crown of American higher education, drawing students from all around the world, would be totally unaffordable. The tax plan is a plan to end U.S. leadership in higher education. It’s not going to make America great; it’s going to take America backward.”