Last Wednesday, a national graduate student walkout protested a provision in the House tax bill that treats tuition waivers for working graduate students as taxable income.
The message was that our new expected taxes would be entirely unaffordable on our meager stipends. While this is unequivocally the case, it’s worth walking through the math to see just how bad it would be, and for whom.
Let’s start with the increase in taxes for in-state graduate students. I’ll assume a stipend of $18,000, which is the salary that graduate students receive for research and teaching, though stipends vary by department. In-state graduate tuition is $7,134. Currently, their tax liability would only be on the stipend and would be a reasonable $735.
But under the bill the House passed, this student’s taxable “income” would balloon to $25,134, and their new tax liability would be $1,552. This additional $817 more than doubles their liability.
Our graduate student is also on the hook for about $2,000 in student fees annually, which leaves our graduate student with a paltry $14,448 net income -- slightly more than the federal poverty line of $12,060 for a single individual. (Don’t forget that graduate students often have dependents.)
It’s worse for our out-of-state student, whose tuition is $20,412. This student’s current taxes on the $18,000 stipend would be the same $735. But, when the House tax bill pretends their income is $38,412, the taxes jump to $3,145.44.
This additional $2,410 more than quadruples their liability. After this and student fees, our student’s net income is $12,854.56, barely above the poverty line. (In my department, philosophy, our stipends are $13,000; our taxes would increase tenfold from $235 to $2,560.)
Graduate students cannot afford this. If the House plan becomes law and graduate students face this additional tax, graduate school enrollment rates will drop. UNL depends on graduate students for teaching and research.
If enrollments drop because Congress makes graduate school unaffordable, UNL wouldn’t be able to operate. So, UNL will have to raise stipends to make up the difference.
There are about 4,500 graduate students, 60 percent of whom are out-of-state students. Let’s assume that two-thirds of grad students are funded, and that the proportions of in-state and out-of-state are about the same.
This would give us about 900 funded in-state students and 1,800 funded out-of-state students. The $835 stipend increase for those 900 in-state students comes to $751,500. The $3,266 stipend increase for out-of-state students comes to $4,928,400. The grand total is $5,679,900, which UNL would pay to balance the corporate and top-earner tax cuts.
The Legislature slashed funding for the university last year, causing a projected $49 million shortfall. So, we can’t count on them to step up and correct Congress’s mistake. And since UNL has already done significant belt-tightening to get through these lean times, they can’t juggle funds to make this up elsewhere.
Instead, UNL will be forced to raise tuition for undergrads, because that’s the only other place the money can come from. There are 19,865 full-time equivalent undergrads at UNL.
Dividing $5,679,900 across those students increases tuition $286 each, or $1,020 over four years.
(Don’t forget to factor in the student loan interest on your own. And remember that in 2013 Congress set these interest rates be 2 percent above market rates. The House bill also ends the student loan interest deduction.)
This would be on top of recent tuition increases. In-state tuition increased $367.50 for the 2017-18 academic year, $180 for 2016-17 and $112.50 for 2015-16, or $630 since 2014. Increases for 2018-19 may already be on the books. Out-of-state undergrads have seen even higher increases.
It’s not in our interests to raise tuition, to make a college degree more unaffordable, just to pay for tax cuts for corporations and top-earners.
Part of what is so frustrating about this is that tuition waivers are just internal accounting. Not only would graduate students be over-taxed, they would pay real taxes on pretend money.