Higher education could take a big hit under the tax plan passed by the House of Representatives.
Students working toward graduate degrees would be taxed on the full amount of tuition, even if that tuition is waived, as it is for many.
Take Rita Tohme, for example.
She is working toward her Ph.D. in molecular medicine at Case Western Reserve University, working toward a career in cancer research.
Tohme’s $60,000 annual tuition is waived and instead, she is given a $28,000 per year stipend in exchange for research. She’s also barred from taking any other forms of employment to keep her full focus on her thesis and research.
Tohme is taxed on that $28,000, but the House tax plan would tax her on the full $60,000 — money that she never sees.
“This is basically a virtual number right, we don’t see it in our bank accounts,” Tohme said.
Tuition for many students working toward a PhD is waived if they do research or teach at the university.
The concern with taxing that amount as income is that it could discourage students from pursuing advanced degrees and make higher education even more attainable for low- and middle-income families.
Dan Shoag is an associate professor of public policy at Harvard University and a visiting professor at Case Western.
“This will make it harder for graduate students to afford at current tuition and current vouchers, so it’ll put pressure on universities to find a way to make graduate studies affordable,” Shoag explained.
By the numbers, there are currently 6,200 graduate students enrolled at case — compared to 5,100 undergraduates. Cleveland State University has approximately 3,948 graduate students enrolled. At the University of Akron, 2,837 graduate students are working toward advanced degrees.
The Senate version of the Tax Cuts and Jobs Act keeps the current exemption on taxing graduate tuition waivers so it remains to be seen what the final version contains.