November 20, 2017
On 16 November, the House passed a tax reform bill, the “Tax Cuts and Jobs Act”. The bill contains several provisions that would strip critical tax benefits that support graduate students. Specifically, the bill would:
- increase taxes for graduate students and others by making tuition waivers (tuition fees waived by schools) count towards taxable income. Changing this law has the potential to push graduate students into higher tax brackets. Taxing these waivers puts an undue burden on graduate students, requiring student to pay taxes on those funds, which never actually enter students’ bank accounts.
- strike the Student Loan Interest Deduction from the tax code. Graduate students make up 14% of the student population in the United States, but carry 40% of the debt load. Terminating this deduction would strain the finances of individuals and families
- eliminate tax free employer paid education assistance. Many graduate students can only afford to conduct their research because their employer provides funding. This change would reduce incentives for employers to seek continuing education for their employees, for the employees to pursue that education, and force thousands of graduate students nationally to choose between taking on perilous levels of debt or abandoning their education.
- consolidate the American Opportunity Tax Credit with a five year limit. The tax bill also eliminates the Lifetime Learning Credit. Both of these are programs non-traditional students often rely on to ease the financial burdens of education.
These tax provisions would increase costs to students, reduce access to education, and diminish their ability to contribute positively to the nation’s economy in the future.
While the Senate version of the bill does not include these provisions, it does contain provisions that would place a significant burden on universities and their ability to support students – a move that has been condemned by universities.
If the House and Senate pass their separate bills, legislators will need to work to reconcile the differences. Together, we must ensure that the final tax bill does not include these harmful provisions, which would be disastrous for both graduate students and higher education as a whole. Take a few minutes to help amplify our voice to policymakers and urge your legislators today to reject these harmful tax provisions.