When I saw a headline about the tax bill destroying higher education, I assumed it was hyperbolic… but then I saw the subheader. It mentioned graduate students’ tuition waivers (often valued from $15,000 to $30,000 depending on in-state status) would become taxable income. For anyone remotely familiar with graduate school, this is clearly devastating and irrational.
Case study: me. I’m lucky; I’m at Michigan, which has a relatively high graduate student stipend for most STEM fields. I can pay rent and buy groceries without taking out loans, turning to food stamps, taking a second job, or just being flat broke – which is more than a large number of graduate students can say. That, you may realize, is a pretty low bar for a “good standard of living,” especially for people with college degrees. We chose to enter grad school because of our passion for learning and our desire to advance our understanding of the world. Grad students actively work to propel human knowledge forward. It is our job. And because we are dedicated to that goal, we agree to pretty meager salaries for five to seven years after college. If we can make a small living, that’s great.
In-state tuition for UM graduate students in my department is valued at ~$25,000/year. That isn’t money that I can put towards food or a new pair of shoes. That goes from the funding source (department fellowship, advisor’s funding) to the University – I don’t see it. It’s not income for me. Adding that $25k to my income would send me into the 25% tax bracket, and would hike my taxes from about $2000 to about $13,500. However, that $13,500 wouldn’t come out of the “income” the tax bill would define; it would come out of my actual income, which is < $30,000. It would take my salary from livable (not extravagant by any means) to paltry, and leave me absolutely unable to save month to month – unable to pay off existing student loans, unable to contribute to an IRA, certainly unable to start a trajectory towards the “American Dream” of home ownership. Unable to contribute to the free market, unable to “stimulate the economy.”
So tell me again how the proposed tax bill will put money in the pockets of everyday people.