The U.S. House-passed tax bill to tax graduate student tuition waivers would have far-reaching implications on students, the university and the region.
We have worked with graduate students from all walks of life in our roles as a director of a Ph.D. program and as a former graduate program chair.
One student, from a small African country, has been granted political asylum in the United States. She does impressive research on how it happens that dictatorships fall and create space for emerging democracies. Another, a white native-born American and the first in her family to attend college, studies the long-term impacts of war on the well-being of civilian populations.
Like many other graduate students, they work incredibly hard on research that will have real impacts for the U.S. and the world, give public lectures, participate in teacher training, and do many other scholarly and public activities. Along with about 145,000 other graduate students in the U.S., our students also work as teaching and research assistants, in exchange for tuition waivers, modest living stipends, and health insurance. Graduate stipends at the University of Washington range between $20,655 and $23,850 for a nine-month appointment, barely enough to live on in Seattle.
Our admiration for our students is all the greater because they work late into the night, weekends and holidays for this modest pay. They do it because they care deeply about their work and contributing to their communities. This is typical of the thousands of dedicated, creative and entrepreneurial students who make American graduate education the envy of the world.
But the tax bill that the U.S. House of Representatives passed and is now being reconciled with the Senate bill could bring all this crashing down. While discussion of various provisions dominates the news, the tax on graduate tuition waivers has received far too little attention.
The House version would tax the dollar value of the tuition waivers. This would massively increase graduate students’ tax obligations, representing a severe de facto cut to their modest stipends. This provision would dramatically undermine graduate students, and graduate education more generally.
Keep in mind that the university system is a crown jewel of our country. U.S. universities consistently dominate the Top 10 and Top 100 rankings worldwide. These rankings partially reflect the high quality of graduate education and are a cause and consequence of the U.S. being able to attract some of the best local and international talent. Our country benefits in countless ways from our graduate programs. The House bill stands to decimate this glowing example of U.S. leadership in the world.
Consider the case closer to home. The UW contributes to the liveliness, diversity and booming economy that make Seattle a desirable place. With almost 5,000 enrolled, graduate students play a key role in making the UW one of the highest-ranked universities in the world. Students from the UW’s graduate programs become our innovators, scientists, educators and entrepreneurs, enriching the private and public sectors alike.
The consequences of taxing tuition waivers would be broad. Many students will no longer be able to afford graduate education. Universities will likely see a decrease in the number and quality of applications. Some enrolled students will be forced to drop out. It is also estimated that there will be a decrease in applications from international students, who will choose to attend universities abroad. The House proposal means fewer American and international students and a decrease in the quality and rankings of the U.S. university system.
Worse still, we will likely see a less diverse pool of applicants. Students with personal or family wealth will be able to withstand the blow. Poorer and more disadvantaged students will be forced to drop out or not apply in the first place. Universities will lose the talent, vitality, and innovation that come from a range of students of all classes, races and countries. Our universities could become bastions of privilege at precisely the time when we are recognizing and relying on the immense value of students from all walks of life.
The House bill is being reconciled with the Senate bill (which does not contain the tax). The reconciliation process determines which provisions are kept and which are discarded. We need to make sure that the tax on tuition waivers is not part of the final tax law.