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GOP tax plan aims to trim college tuition benefits

By Jody Greene in the San Francisco Chronicle

No one goes to graduate school for the money. According to federal data cited in the Chronicle of Higher Education, more than half of graduate students in this country have adjusted gross incomes of $20,000 a year or less. That includes graduate students in California’s public and private universities, who struggle to survive on a poverty wage in some of the costliest cities on the planet. They do so because California’s universities are justly famed around the country and around the world as leaders in research and innovation.

Our future biomedical researchers, economic analysts, climate engineers and social and cultural change-makers get their start in the nation’s premier graduate programs, in the United States in general and in California in particular. In addition, graduate students who work as teaching assistants help keep tuition costs down for undergraduates, by providing individualized teaching support to undergraduate students at a modest cost. By running discussion sections and grading papers, problem sets and exams, teaching assistants experience an apprenticeship in teaching and more of professors’ time is freed up to do the cutting-edge research that gives our universities their justified reputation for greatness.

Now, it seems, President Trump and Congress would like to change all that.

The tax bill making its way through the House of Representatives contains a provision that would tax tuition waivers for graduate students. Because, as a community, we cannot pay our graduate students enough to make graduate school an option for any but the wealthiest students, we pay their tuition and fees in exchange for the work they do while enrolled. Some work as teaching assistants, while others spend time as research assistants. Under the Republican tax plan, those tuition waivers would now be counted as income — and taxed accordingly.

Thus a graduate student would pay taxes on much more than their paycheck. Let’s say a University of California graduate student was paid $20,000 working as a teaching assistant and had the $19,230 in tuition waived. Under the House tax proposal, the student would pay taxes on $39,230, not $20,000.

A recent study at UC Irvine notes that under the proposed revisions, taxes would rise 200 percent for California resident graduate students who work as teaching assistants. Take-home pay for those students would drop by $2,000, to just over $17,000 a year. For out-of-state students, taxes would increase 323 percent, to nearly 25 percent of their annual income. Given that nearly half of students entering Ph.D. programs at UC Irvine come from low-income backgrounds, this change is bound to drive out nearly all those who aspire to a doctorate.

Even with the proposed doubling of the standard deduction, which could offset some of the financial liabilities of taxing tuition waivers, this policy profoundly misunderstands the waiver, which is money a student never sees. We don’t plan to tax the tuition vouchers for charter and private schools so much beloved by Secretary of Education Betsy DeVos; why, then, tax the very same vouchers for graduate students?

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