Chris Maccini gets by on a little less than $900 a month.
He’s a graduate student in his second year of Eastern Washington University’s creative writing program, and he gets by on the small stipend the university provides him. His wife, who’s getting a master’s in social work, is in a similar boat.
Because their combined income is about $1,200 a month when school is in session, they would pay next to nothing in taxes under current law. But that would change if the tax reform bill passed Thursday by the House of Representatives becomes law.
Like many graduate students, Maccini pays only about 10 percent of the advertised cost of his EWU education. The rest is covered through a tuition waiver, an agreement where he works about 20 hours a week on campus in exchange for the rest of his tuition cost.
“It doesn’t really make a lot of sense to go into a lot of debt to get an art degree. (The waiver) really makes the program possible and it makes Eastern’s program competitive,” he said.
It’s a typical arrangement for graduate and Ph.D. students across America: free or steeply discounted tuition in exchange for teaching undergraduate courses, tutoring other students or working with faculty on research.
But the GOP tax bill passed Thursday would count those tuition waivers as earned income, requiring students like Maccini to pay taxes on it. Even though he never sees the $10,077 per year he receives as tuition support, he’d end up owing taxes.
Last year, his wife also received a waiver worth about $10,000, though this year they’re covering her tuition out of pocket. If the couple had to pay taxes on two tuition waivers, they’d end up paying about $1,000 more, even with the doubled standard deduction included in the bill.
That might not be a deal-breaking amount for every graduate student. But it’s enough to make some reconsider, especially people in programs where the sticker price for tuition is significantly higher.
“It’s feasible to get a graduate degree and live in Spokane on a stipend with a waiver. But if this bill passes, that mostly wouldn’t be possible,” Maccini said.
It’s a threat universities are taking seriously, said Glenda Becker, Washington State University’s lead federal lobbyist. The Senate version of the bill does not change tuition support, and higher education lobbyists are working to make sure the provision is not included in the final bill.
“This is WSU’s No. 1 priority in the tax bill,” she said.
The university has about 1,900 graduate students and handed out more than $16 million in tuition waivers in the fall of 2013, she said. She’s been in touch with Rep. Cathy McMorris Rodgers’ office and found her receptive to making changes.
“It impacts students across the board. It impacts the economy of Washington state and the district and she knows that,” Becker said of McMorris Rodgers.
McMorris Rodgers said Friday that while she supports the House bill overall, she doesn’t support counting tuition waivers as taxable income. She’s hopeful the provision would be eliminated in negotiations before final passage.
“That’s one of those provisions that I prefer what the Senate is proposing,” she said.
Though the provisions directly impact graduate students, Gonzaga professor David Schroeder said the impacts would trickle down to undergraduates as well.
Schroeder finished his Ph.D. in computer science at the University of Missouri in 2014 and worked as a teaching assistant and research assistant to cover the full cost of his tuition. He paid taxes on the stipend he received for living expenses, but he was able to support his wife without going into debt.
If he’d paid taxes on his full tuition, he might not have been able to afford school, he said.
“I imagine it will affect the prospects we have for faculty members,” Schroeder said. “If people are discouraged from going to grad school … presumably the quality of instruction would go down.”
Research would also be hurt, he said.
“It will dramatically affect the ability of the U.S. to perform research because it’s not a well-hidden secret that most of the work that goes into performing research is done by graduate students,” he said.
Becker is optimistic the House will listen to concerns raised by universities and graduate students. Rep. Kevin Brady, R-Texas, said on the House floor he would work “toward a positive solution on tuition assistance in conference with the Senate” after other representatives raised concerns about its impacts in their districts.
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