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The U.S. House of Representatives just passed a bill that may make life a lot harder for graduate students. An overwhelming majority of Republicans in the House pushed forward the Tax Cuts and Jobs Act which is aimed at “dramatically reducing corporate and individual income taxes.” But what’s hidden in the bill is something that could actually cripple graduate research in the United States…
The Tax Cuts and Jobs Act repeals Section 117(d)(5) of the current tax code, meaning that graduate student tuition waivers will now be taxed, creating a larger tax burden for graduate students receiving these waivers.
One M.I.T. student wrote an article for the The New York Times, explaining how many graduate students benefit off of Section 117(d)(5), which doesn’t tax the tuition waivers of graduate students. Without this provision, their waivers would be taxed, which will deeply impact the students who aren’t independently wealthy.
Erin Rousseau is a graduate student at M.I.T., studying the neurological basis for mental health disorders. She works between 40 and 80 hours a week as a classroom teacher and laboratory researcher. The tuition waiver keeps students like Erin from paying about $50,000 a year. But since Section 117(d)(5) has been repealed, that waiver will now be taxed. This means that M.I.T. graduate students will need to pay taxes on an $80,000 annual salary when they actually only get to hold onto about $33,000 a year from M.I.T. graduate stipends. As a result of this bill, the tax burden for these graduate students will increase by at least $10,000 annually.
Not a penny of that $50k tuition waiver goes into the pockets of the students of M.I.T. But now, that tuition waiver will be taxed as if it were a part of the student’s annual income.
All graduate tuition waivers are now taxed, which can make the college experience all the more expensive and difficult for many students. Ironically, a bill called “Tax Cuts and Jobs Act” actually created a hefty tax for students looking to advance their careers.
