While not attracting much attention among the general public, the tax reform proposals now making their way through the U.S. House and Senate may have a significant impact on graduate students across the country, including our own graduate students at Eastern Kentucky University.
As with many institutions, we provide graduate assistantships for qualified graduate students who, in turn, serve the university through their efforts as teaching assistants, tutors, research assistants and a wide range of service and support activities that are related to their programs of study.
Graduate assistants receive a stipend and a partial tuition waiver as a form of financial aid in recognition of the valuable services that they provide to the university. Under the current tax legislation, the financial support provided by the tuition waivers is not considered as income and is not subject to taxation.
The new proposals coming out of Congress could change all that. The House version of tax reform would remove the exemption for tuition waivers for all graduate assistants. While the Senate version maintains the exemption, the ultimate fate rests on t
he outcome of the reconciliation of the two bills. Unfortunately, tax advantages for lower-income individuals do not seem to have been a high priority in the legislation that has been proposed.
Looking beyond our own institution, the proposal passed by the House is short-sighted for other reasons. There is a vast amount of national data pointing to the higher income earned by individuals who have attained graduate degrees.
The House proposal will actively discourage individuals from pursuing graduate degrees at the master’s and, particularly, the doctoral level. Fewer students pursuing PhDs in research may erode our economic competitiveness. The small amount of income that will be collected from graduate assistants will be offset by the reduction in taxes from fewer individuals with the higher income that accrues over their lifetime and comes from attaining a graduate degree.
Universities and organizations, such as the Council of Graduate Schools, have been working diligently trying to preserve the tuition waiver tax credit as an investment in the future of our country. At this point, our hope is that the language in the Senate bill will prevail as the final tax bill works its way through Congress. Unfortunately, this is only one of the many threats facing higher education in today’s political environment. It’s incumbent on all of us to continue making the case for the value of higher education in the months ahead.
Dr. Jerry Pogatshnik serves as dean of the Graduate School and associate vice president for research at Eastern Kentucky University. He was appointed as the dean of the graduate studies program in 2005.
Dr. Pogatshnik graduated from the University of Connecticut with a PhD in physics. He worked at Southern Illinois University Edwardsville as a professor in the physics department and eventually was named the associate dean of the Graduate School before coming to EKU, according to the National Council of University Research Administrators.