Congress is putting the future of the country’s graduate-degree programs on the line if it goes through with a plan to tax as income the tuition discounts universities offer many of the students in them, petitions drafted or endorsed by graduate students at Duke University contend.
The repeal of the existing exemption for tuition remissions would translate into a “tax increase of thousands of dollars” for the affected students and likely “force nearly all graduate students except the independently wealthy to discontinue their” education, said a petition drafted and circulated by Nicholas School of the Environment student Jonathan Choi.
Choi’s missive drew support from a bit more than 1,600 people, with “representation from across the state,” he said.
Students from UNC-Chapel Hill, N.C. State University, UNC-Greensboro, N.C. A&T State University, East Carolina University, UNC-Wilmington, Western Carolina University and Wake Forest University have joined their counterparts at Duke in signing it, he said.
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The petition – and a similar though broader one circulated on Change.org by the National Association of Graduate-Professional Students – target a key provision in the tax bill that cleared the U.S. House of Representatives on Nov. 16 on a 227-205 vote.
The Senate passed its own bill on Saturday, 51-49, and the two bills will go to a House-Senate committee out of which a reconciliation bill will be hammered out that both houses of Congress will have to pass before it can be sent to President Donald Trump to be signed into law.
The Republican-backed measure is a major rewrite of the federal tax code, one designed to cut corporate taxes while eliminating or cutting back on existing exemptions and deductions, among them several that affect the country’s universities.
As a whole, the House version’s been described by Duke School of Law tax specialist Larry Zelenak as “a remarkably bad news bill” for the higher-education sector, and Moody’s Investors Service analysts said it risks “potentially harming the affordability of higher education.”
University leaders throughout the Triangle have joined the chorus of criticism. Duke President Vince Price has said the bill’s key higher-ed-related provisions “directly threaten Duke students, employees and their families.” And UNC system President Margaret Spellings contributed a op-ed to the Chronicle of Higher Education – the leading trade publication for university administrators and faculty – this week that said the tax rewrites now on the table could trigger “a self-inflicted setback in the national effort to build a more competitive, better-educated citizenry.”
Spellings – former U.S. President George W. Bush’s second-term secretary of education – called the proposal to tax tuition remissions “ill-considered.”
“You can’t pay taxes with a waiver,” she said, alluding to the difference between paper income and actual cash. “We already ask too much of our graduate students. Asking them to kick in $5.4 billion more in taxes on theoretical income over the next decade is simply unsustainable.”
The tuition-remission section has drawn notice from the outset because universities typically give master’s- and doctoral-degree students who assume teaching or research duties as part of their apprenticeship deep discounts on the sticker price of tuition. It’s hardly unheard of for them to waive tuition entirely.
At the same time, grad students often receive cost-of-living stipends. Under current law, the stipends are taxable, the tuition break isn’t.
The House proposal would make the entire package taxable which, at a place like Duke, can mean that a $20,000 annual income would suddenly become an $80,000-a-year one in the eyes of the Internal Revenue Service, Choi said. The recipient’s federal tax bill would rise accordingly.
Choi noted that along with the direct effect on students who’d face a sudden tax increase, the change would have ripple effects on the region’s economy. With more going to the government, the students who do find a way to continue their education would have less money to spend at local businesses.
“Do want to discount all the work graduate students do for the academic community?” he said. “Do we want to exclude graduate students from being parts of the communities they live in? And do we want to be removing this kind of academic innovation and this kind of scientific advancement from our country? As a society, we need to be asking the question whether we do value education.”
A parallel tax rewrite is underway in the U.S. Senate, and its version so far wouldn’t make tuition remissions taxable. Choi and people like him are hoping the Senate’s view ultimately prevails. His petition targets North Carolina’s U.S. Sen. Richard Burr and U.S. Sen. Thom Tillis. Both are Republicans.
Choi’s pursued a North Carolina-focused petition strategy, hence the list of schools he’s targeted. He contacted the Graduate & Professional Student Council at Duke and its equivalents at several of the other universities.
The Duke council “reached out to me and asked if I wanted any of their resources” on the promotional front, “so they’ve been great,” said Choi, who intends to pursue both a doctoral and a law degree to work in the environmental field.
The GPSC had also been urging Duke students to sign a National Association of Graduate-Professional Students petition.
Two of the GPSC’s leaders, President Rashmi Joglekar and Director of Advocacy Will Barclay told students on Nov. 13 that the campus group is “monolithically opposed” to making tuition remissions taxable, thanks to the possibility a student “instructor or researcher that is working for less than minimum wage would be taxed as if they receive a nearly six-figure salary.”
Zelenak, however, has questioned whether the change would hit that hard. He speculated that universities could get around it by converting remissions into actual scholarships.