After a compressed legislative process and a vote carried out largely along party lines, the U.S. Senate passed a $1.5 trillion tax bill that would be among the largest changes to the tax code in recent memory. Last month, the House of Representatives passed its own version of a tax bill, and now the two will go to a joint conference committee to work out the differences and send a single version to the White House. The Trump administration has it wants to sign a bill into law prior to the year’s end.
The original House tax bill had to which colleges, universities, and vehemently object, and which are not included in the Senate version, but which may end up in the final bill after conference. In addition to the removal of tax deductions for interest on student loans — which are not disbursable in bankruptcy — and a tax on endowments where the value of the school’s endowment is over $250,000 per student, the House bill would make tuition waivers taxable income.
At the University, graduate students of about $30,000, and about $47,000 of waived tuition: Under the House bill, their yearly tax burden would go from about a year to over $11,000, more than a third of their actual, take-home pay. This final detail worries many graduate students, who rely on these tuition waivers to finance their education.
Krupa Jani GS, a fourth year Ph.D. student at the University enrolled in a joint M.D.-Ph.D. program with the Robert Wood Johnson Medical School at Rutgers University, noted that such a tax “would impose an undue financial burden on graduate students who perform … vital and innovative research” and that she herself would have found it hard to pursue graduate school if the bill were passed. For this reason, she says, Princeton Citizen Scientists went to Capitol Hill to advocate against the tax on tuition waivers.
Jani further noted that the tax could “disincentivize the brightest minds (unless they came from substantial wealth) from pursuing graduate school.”
Ben Parks ’17, now a graduate student at Stanford University, said that he and other students in his department were worried about the potential financial impact of the tax bill, but that he is “waiting to see what happens” and hopes the provision is ultimately dropped.
Many institutions of higher learning have rallied against the tax bill. Joyce Rechtschaffen ’75, director of the University’s Office of Government Affairs, that the bill “imposes new financial hurdles [on students] through changes in the tax code.” MIT president L. Rafael Reif the potential tax burden on graduate students “devastating,” and said MIT would “have to provide further aid to compensate,” leading to a “sharp cut” in the number of students.
In the midst of this political maelstrom, many seniors at the University are now in the middle of applications to graduate school, and some seemed worried about the potential impact of the bill.
Rajeev Erramilli ’18, a physics concentrator, said that, while he was still mostly applying to U.S. institutions, he was considering studying abroad more seriously. Daniel Stanley ’18, a senior in electrical engineering, agreed that the tax provisions were not ideal, but said his application plans had not been seriously altered.
House Speaker Paul Ryan said he members to a conference committee on Dec. 4 to begin the process of reconciliation. With many other issues, including a repeal of the Affordable Care Act’s individual mandate from the Senate bill, on the bargaining table, there’s a lot at stake for many students nationwide.
Head Design Editor Samantha Goerger ’20 contributed reporting.