When I applied to grad schools I was accepted with full tuition wavers and stipends to all but one. That one gave me a good stipend and reduced tuition to a trivial fee ($300). They say you can even defer the fee until payday.

In general, why might a university not reduce stipend amount by the fees rather than charge the trivial fee?

It seems bureaucractically harder to have a fee.

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    What was the fee? In some cases, there might be legal (political) restrictions on having the university pay for certain services for students. This could be circumvented by making the student pay it themselves. – Nate Eldredge Jul 19 '16 at 21:56
  • @nate Eldredge it was just generic unspecified "fees" – user41631 Jul 19 '16 at 22:25
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    I believe Nate has the right idea for the typical case. For example, student health insurance fees may not be automatically waived, as a waiver is conditionally granted depending on any existing health coverage you have. Possible religious objections may also complicate automatic waivers: if you're religiously opposed to birth control and their plan covers it, then that might be a problem. Why, in your specific case, the fee is generic, I don't know. Possibly they don't have to tell you, and/or it's for something else (covering a budget shortfall, say). – zibadawa timmy Jul 20 '16 at 5:47
  • Maybe they are doing it to benefit the student ... depending on whether the student (1) has to pay taxes on the stipend, or (2) can deduct the fees from their taxes. – GEdgar Jul 20 '16 at 15:02
  • You could always just ask them why. – Justin Ohms Jul 20 '16 at 19:31

Actually, it’s almost certainly easier bureaucratically to simply charge the fee and increase the amount of money they pay you. You have to think of this from the point of view of budgeting. Each of the different fees you pay gets deposited in a different department or organization’s budget. Let’s say it’s a fee to the gym. The gym has a responsibility to manage its own budget in the university, and it pays for its services out of those fees.

Your stipend is being paid by the graduate school, and yes technically the grad school could just pay the gym automatically and give you less money. But what would happens if something goes wrong and the grad school doesn’t pay the gym for your membership? The director of the gym now has to go figure out why the grad school didn’t pay. But how is the director of the gym supposed to know how many grad students were supposed to have been paid for? How is the dean of the grad school supposed to be able to verify that the gym didn’t receive payment for the full complement of students?

It’s way easier, from the point of view of both the gym and the grad school, to just make you responsible for the fee, and to give you the money to pay it with.

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  • Increasing the stipend substantially might start having interesting tax implications, however - if the local tax law treats the stipend as income, then they'd be taxed on it before being able to pay the fees, leaving them out of pocket, or meaning the university had to increase the stipend further to leave the student with the same money. – Andrew Jul 19 '16 at 22:02
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    @andrew in most places fees are tax deductible – user41631 Jul 19 '16 at 22:25
  • I'm guessing whether it's easier or not depends on the internal bureaucracy. If the grad school sets up automatic payment of fees, then the gym doesn't have to worry about collecting fees from individual students, which could be more of a hassle. I can imagine it's easier for the grad school however. – Kimball Jul 20 '16 at 5:28
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    its own budget, please? – Federico Jul 20 '16 at 7:52
  • When I was in grad school, this was the approach for insurance. We got paid an extra $XX to cover the insurance costs, and then we had to pay the insurance directly (it was weird, though the school, but not deducted from the paycheck like most workplaces). I don't think any of the students liked the arrangement because (a) the extra income was taxed and (b) The insurance was billed annually, so you got hit with something like a $800 bill every August. – pwcnorthrop Jul 20 '16 at 15:41

I'm going to differ from a couple of the other answers and suggest that the most likely reason is budgetary, not bureaucratic, based on what I know about my state university in the US.

The money for your tuition, and possibly some fees, comes from Graduate College. The fees you have to pay go to the University, not the Graduate College. The Graduate College does get money from the University, but only a small amount because those in charge of the University want to allocate most of their money to other areas.

Because the Graduate College has a tight budget, they decide to cover your tuition to be competitive with other grad schools, but cut some costs by not paying all (or any) of your fees. While $300 may not seem like a lot to you, multiply this by the number of grad students the Grad College supports and compare with their small budget and it might cut their expenses by 1-2%.

Also (I think this is one thing Tom Au is getting at) it may happen that the University needs to increase fees to deal with tighter budgets, and now the Grad College is not committed to covering those increased expenses in later years.

The first approach to cutting cost is often to trim expenses by a small amount in different areas to minimize effects of shrinking budgets. Were there much more serious budget cuts, you might have to pay more in fees, or get a significantly lower stipend, or have to pay for part of your tuition.

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The grad school wants to retain the right to raise, or otherwise "move" fees. Yes, it costs a bit more bureaucratically, but it would cost even more to go to a "no fee" policy and then institute fees. Apparently, the school is adopting a "wait and see" policy toward fees, government grants, alumni donations, and its other sources of revenue.

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Our institution waives tuition fees for graduate students on a stipend. It seems logical to avoid paying us money we would simply have to pay back. However, I think the reason more so that they can provide a tuition (additional places in a course) at little additional costs to add students to an existing course (avoiding transaction fees and tax payments or exemption may also be factor). Particularly, if we graduate students are doing research to raise the profile of the university and attract external grants. It would actually cost them more to pay students additional stipend to contribute to these courses themselves.

However, we are expected to cover a ~$500 "Services Fee" annually. This may well be for the reasons suggested above, to avoid the graduate school paying for our internet, gym membership, student's association, or contribution to university buildings and administration. A stipend payment is already being made and the Service fee system is already run to cover these costs for undergraduates.

It may also be that it is easier for the graduate school to justify paying for our fees to their funding bodies than the services fee (half being a basically a gym membership). Somehow I doubt a Trust donating to say cancer research would be very impressed to find out they were paying for a gym membership for dozen's of graduate students.

It does seem to be an arbitrary fee (particularly as a lump sum at the start of the year) and most of the graduate students I've discussed this with would prefer to have it covered by the university. Another popular suggestion is have such services such as the gym or student internet (we get staff network in out labs) made optional. However this fee also covers our student's association which is dominated by undergraduates (who wish for the fee to be compulsory to be cover by Student Loans). Since our association recently (reluctantly) switched to "voluntary membership" due to changes in national legislation, i.e., opt-out with zero fees, this association has no interest in enabling graduate students to waive a service fee which indirectly funds them.

TLDR; So yes: Bureaucracy.

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There might be a tax or other governmental reason to have the fee in place. Often if you give something away it is taxed as a gift, i.e. at a higher rate, but if if you pay the student and then make them pay the fee, you shift the tax burden to them and or reduce the tax burden. Additionally if there is a student paying out of pocket or an external grant it is easier to say "everyone has to pay the fee"

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