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A tax proposal in the US is reported to make "tuition waivers that many graduate students receive when they work as teaching assistants or researchers" taxable.

I am currently a PhD student at a US institution. All regularly enrolled PhD students at my institution have tuition 100% covered, whether through an external grant working for an advisor as an RA, as a TA, or through a university or external fellowship. Tuition is not formally waived; money is actually moving between accounts, even if (in the case of TA's and university fellows) the money is moving from one university account to another. There is a paper record as a part of my paycheck (I also get a stipend) that shows the tuition support that is being paid out. Currently no student, to my knowledge, pays taxes on the tuition support that is paid on their behalf.

I am wondering, in the context of the proposed legislation, what are the "tuition waivers" that would be taxed? Is it all tuition money paid on a student's behalf, as I've described above, or is it some subset of that, or is it something else?

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    It really looks dire. Hard to see how this wouldn’t destroy science in America.
    – Noah Snyder
    Commented Nov 5, 2017 at 0:13
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    @Noah Pretty sure that's the point. It'll be fun to see how fast anti-union schools backpedal on their "free tuition" argument too.
    – Elizabeth Henning
    Commented Nov 5, 2017 at 0:21
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    Seems like this could kick off an interesting political discussion about transfer pricing and exactly how the student/institution relationship should be described.
    – Nat
    Commented Nov 5, 2017 at 2:50
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    @Just_to_Answer a tax deduction decreases your taxable income, not hte tax itself, so a $12.5k deduction would make your taxable income $35k in that case (let me know if I'm misunderstanding you.) But that's only one example. What if your tuition is $50k and your stipend is $30k?
    – NeutronStar
    Commented Nov 6, 2017 at 2:09
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    @Just_to_Answer deductions are amounts taken out of income for purposes of determining tax owed, not full credit on the tax amount. In your example, the taxable income would be reduced from $50K to $37.5K, which is a lot more than the current $20K less the current deduction.
    – Brian Borchers
    Commented Nov 6, 2017 at 23:02

1 Answer 1

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A tuition waiver is when no tuition charges are paid at all. For instance, at my university, graduate students on research or teaching assistantships are not charged any tuition, nor are their advisors. In this sense, they have been granted a waiver for their tuition.

Note that even partial-year tuition waivers can be significant. For instance, during the 2017-2018 year, MIT would charge over $16,000 for summer tuition for graduate students, unless they're only enrolled in research!

I have yet to see any commentary on the issue of advisor-paid or department-paid tuition counts as a "tuition waiver."

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    The Chronicle article seems to make it clear that the intent of the bill is to tax tuition paid on behalf of the grad student by the department, and possibly through grants as well. It's not uncommon for money you never see to be considered "income" for tax purposes--for example, forgiven debt is generally taxable.
    – Elizabeth Henning
    Commented Nov 4, 2017 at 22:53
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    Also, currently, when students do pay their own tuition, they can deduct this from their taxable income. The proposed change to the law would also eliminate this deduction.
    – Brian Borchers
    Commented Nov 4, 2017 at 23:36
  • @BrianBorchers yes, my last year at university I claimed myself as 'independent' on my taxes. My $10k in tuition was deductible, as was my laptop purchase (for school). In years prior, I only received about $300 as a refund. But that year, I received $2,400. When filing as a 'dependent', my parents got the tax break (even though I was actually paying the tuition)...
    – Chris Cirefice
    Commented Nov 5, 2017 at 21:23
  • Can you give a sense of how widespread the practice is in the US? Moreover, your profile puts your university in Germany - how does that square with the US-specific nature of the question?
    – E.P.
    Commented Nov 7, 2017 at 20:07
  • @E.P.: Sorry—my profile is out of date. I've been back in the US (I grew up here) for a while now. As for how widespread the practice is, I don't know where the statistics for those are (or if they're even kept).
    – aeismail
    Commented Nov 7, 2017 at 20:26

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