Graduate students at the University of Nebraska and other universities around the country are raising concerns over one provision of the broader tax overhaul approved on a party-line vote in the House of Representatives on Thursday.
Tuition waivers offered to graduate students and those in doctorate programs are not taxed as income under current tax laws, but the bill introduced by House Republicans would remove that exemption.
If that provision remains intact after Senate consideration, graduate students receiving a tuition waiver — about 0.05 percent of the U.S. population — would essentially be taxed on money they never receive.
Brandy Judkins, a doctoral candidate in UNL’s Teacher Education program, instructs 80 to 90 undergraduate students — most of whom are Nebraskans — aiming to become elementary school teachers, while also conducting research.
As a resident student, Judkins, 32, would normally be charged about $13,000 in tuition, but those costs are waived by UNL because of the teaching and research work she performs.
“That tuition waiver money is not money we ever see,” said Judkins, who completed her undergraduate degree at Georgia State University. “It’s not money that leaves the university. In many ways it moves from a ledger column to a ledger column.”
In addition, UNL also provides Judkins a yearly stipend of about $12,000, which, combined with a summer teaching gig at another university and another stipend from a fellowship grant, will bring her total income to roughly $26,500 this year after taxes.
Under the Tax Cut and Jobs Act passed by the House on Thursday, the tuition waiver Judkins receives from UNL would be reclassified as income, bringing her taxable income to nearly $40,000.
“It pushes me into the next tax bracket based on money I don’t have any control over,” she said.
Many among the 5,000 graduate students at UNL who teach, conduct research, or work in support services on campus — even a few dozen who work in Husker Athletics — would potentially be affected by the move to end the tuition waiver tax exemption.
The collaborative work between UNL and another university in Brazil opened the door for Karen Da Silva to pursue her doctorate in plant pathology in Nebraska, where she researches how to improve yields in maize and hops.
Da Silva, 28, would be paying about $20,000 in out-of-state tuition costs as a graduate student at UNL were it not for the tuition waiver. As a graduate researcher, she receives an annual stipend of about $24,000 for her work.
After state and federal taxes, Da Silva takes home roughly $18,000, which she uses to buy health insurance, pay rent and utilities and purchase groceries.
“We don’t have a lot left at the end of the day,” she said.
Eliminating the tuition waiver exemption would more than double Da Silva’s taxable income to $44,000 and nearly triple her federal tax bill to $6,000, even though she pockets less than half of that total amount.
The change to the way tuition waivers are taxed would be crushing for as many as 145,000 graduate students in STEM programs across the country seeking the doctoral degree needed to obtain a position.
Da Silva, the president of UNL’s Graduate Student Assembly, said if the tuition waivers are taxed, she would have to leave UNL for other doctoral opportunities in Canada or Germany.
“Most of the technology companies or the USDA or any research center need Ph.D. students,” she said. “The market is very competitive, and it will be hard on companies if there are not enough Ph.Ds. or Ph.D. students.”
Judkins, who chose UNL over similar programs at the University of Louisiana-Lafayette and the University of South Florida, said ending the tuition waiver would require her to seek other employment and further stretch the resources of the teacher’s college.
“In my case, I will probably be OK, but other people in my department will not — they still have several years to go and would have to make a very hard decision,” Judkins said.
She added that the change could have a dramatic effect on Lincoln’s economy, where graduate students live and play.
UNL’s graduate students have sought answers from Nebraska’s federal delegation, including Congressman Adrian Smith, who as a member of the House’s Ways and Means Committee, helped draft the Tax Cuts and Jobs Act.
During markup, a proposal to remove language eliminating the tax-exempt status of tuition waivers was voted down. Smith was among the representatives who killed the amendment.
“The overarching goal of this bill is to make the tax system flatter, fairer and more consistent for all taxpayers,” Smith said in a statement. “To benefit the most Americans, including graduate students, we need a growing economy which leads to more jobs and greater opportunity.”
With nearly 30 percent of UNL’s graduate student population coming to the university from other countries, Da Silva said raising the cost of earning a doctorate could force students to finish their terminal degrees elsewhere.
“I think the United States will lose some of the brightest minds,” she said.
Both the Graduate Student Assembly and the Association of Students of the University of Nebraska have adopted efforts to lobby for a change to the provision in the tax bill.
Their efforts will continue the Monday after Thanksgiving with a letter-writing campaign urging Nebraska’s federal officials to change course.