ne of the most foolish parts of the tax bill currently being debated in Congress is a large, new tax on graduate school. The new bill implements this through taxing what is known as “tuition waivers.” At most schools, graduate students do not pay tuition (it is waived).
This is done because grad students, who typically get paid around $25,000 per year, can’t afford tuition that in some cases can exceed $50,000 per year.
In the new tax bill, the value of the waived tuition is counted as if it were money the students are actually getting (their earned income, of course, is already taxed). Thus, a grad student who makes $25,000 would have to pay taxes as if they made $75,000.
This would be a terrible policy because it would hurt one of America’s most prized and valuable possessions: excellence in advanced university research. Graduate students form the backbone of research done at universities in the U.S. When professors proudly talk about the amazing work their lab is performing, the odds are that the critical contributions were made by an army of smart, hardworking grad students.