Thirty members of Congress are urging House and Senate leaders to maintain the income exclusion for graduation tuition waivers in the final tax reform bill.
The waivers shield many graduate students from a large tax on their tuition costs.
“A tax on graduate tuition waivers would be unfair, would undermine our competitive position, and would inhibit the economic growth that tax reform promises,” the members of Congress wrote in a letter to House and Senate leadership.
Currently, the waiver would be repealed under the Tax Cuts and Jobs Act, which passed the House and Senate. It is now in reconciliation.
“Repeal of the income exclusion for graduate tuition waivers would subject thousands of graduate students to a major tax increase at a time in their lives when they likely lack the ability to pay. Graduate students never see the money from a graduate tuition waiver. Their university charges them for tuition then immediately waives it. Under current law, this waiver is not taxable,” the lawmakers wrote.
Referencing data collected by the Bureau of Labor Statistics, the members explained how a graduate teaching assistant can earn a median wage of $34,420. Repeal of the income exclusion, however, could increase the taxable income of those wages by $12,000 to $50,000. The income exclusion protects these students during a time when they just cannot afford paying such a substantial tax.
They added that these cuts hurt students who are future medical researchers, engineers, and software programmers.
“Tax policy should make our country more competitive, and creating barriers to technological progress is contrary to that goal,” they wrote.
One of the members who signed the letter, Rep. Randy Hultgren (R-IL), said it would be particularly harmful to STEM (science, technology, engineering, and math) students.
“Tuition waiver assistance is a vital tool for universities lowering the cost of advanced STEM degrees,” Hultgren, co-chair of the STEM caucus, said. “I have seen firsthand from post-docs at Fermilab in Batavia to graduate students at Northern Illinois University in DeKalb how valuable these students are to American research and how valuable these experiences are to their education and growth. These tools should remain untouched as we continue focusing tax relief to hard-working families and future generations.”