UC Grad Students Join National Protest Against GOP Plans to Increase Their Taxes

Graduate students at USC joined academics across the country to protest a tax increase on their earnings. (Courtesy of Mona Khaled)

If House Republicans get their way, taxes would go up dramatically for graduate students across the country. In protest of this potential increase, grad students on University of California campuses joined academics across the state and country and walked out of classes today.

The House proposal would tax waived tuition fees, which means graduate students could end up paying thousands more in taxes each year. This additional burden would make higher education increasingly unaffordable for graduate students, many of whom are already living at or below the poverty line.

This tax could radically alter how graduate schools operate. In many graduate programs, Ph.D. candidates work for universities. In exchange, the institution gives them a small stipend, often around $20,000 a year, and it also waives their tuition. These waived tuition fees are a big part of many graduate students' compensation packages. At private universities, tuition fees could be up to $50,000 a year.

Right now these working graduate students pay taxes only on their stipend income, not waived tuition fees. Since their stipends are around, or even below the poverty line, grad students end up paying very little in taxes.

Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, said the decision not to tax waived tuition fees is in line with standard taxation principles. The same logic is at work behind the reason why we don’t tax workers for employer-sponsored health insurance.

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“When you have income that you can’t really access, that you can’t really use, you shouldn’t be taxed on it,” Gardner said.

He said tuition waivers have been tax-free for almost half a century. Overturning that precedent and taxing waived tuition fees would bump graduate students up several tax brackets.

“You are going from a situation where these people are recognized as being below the poverty line,” Gardner said, “and putting them in a way where they’re being taxed 10 or even 15 percent.”

Grad students could end up paying more than half of their stipend income on taxes if this proposal becomes law. UC Berkeley graduate students Vetri Velan and Kathy Shield created this calculator for graduate students to estimate how much more they could end up paying each year if tuition waivers become taxed.

The additional cost would make graduate school increasingly unaffordable for students like Marie Gillespie, who studies clinical psychology at the University of Southern California.

“I am a first-generation college student and an immigrant to the United States,” Gillespie said, “and I absolutely could not go to graduate school were it not for this tuition waiver.”

Gillespie said people often don’t realize that in many cases grad students are actually workers. They teach classes, do research and grade papers. Ph.D. programs can last up to a decade, but candidates often take classes only for the first few years. Many are in their late 20s and early 30s. Some have families to support.

Taxing tuition waivers would be disastrous for higher education, UC Berkeley political science professor Wendy Brown said.

“It would essentially push graduate programs back to a 19th-century model of higher education in which only the rich could go on to higher education,” Brown said.

The Senate proposal would keep tuition waivers tax free, but the proposal to tax the waivers could reappear as Congress tries to reconcile plans from the two chambers.

Congress’ Joint Committee on Taxation estimates that taxing waivers would generate $2 billion in revenue over 10 years. That’s small potatoes considering what’s at stake, said David Schwartz, a psychology professor at the University of Southern California.

“Tuition reimbursements for students is a tiny minuscule portion of the economy,” Schwartz said. “On the other hand, the payoff in terms of science and benefits to society is huge. So doing this is just a mean-spirited attack on higher education.”

Schwartz said that unlike corporations and the wealthy, graduate students don’t have lobbies to represent them in Washington, D.C. So instead they have to organize to try to make their voices heard.