December 5, 2017
Proposed tax bills’ impact on grad students
The following message was sent to all UW graduate students by Graduate School Dean David L. Eaton:
Dear UW Graduate Student,
As I’m sure you are aware, Congress has proposed significant changes to our tax system, which could have a very real impact on graduate students. There is a House bill and a Senate bill that, from the perspective of graduate education, are quite different. In short, the House bill has provisions in it that will have major impacts on graduate students:
- It will eliminate a section of the current tax code that exempts graduate tuition waivers from being considered ‘taxable income’ to graduate students. In other words, if this provision is eliminated and you get a tuition waiver as part of your RA or TA position, the value of that waiver (either resident or non-resident tuition) would now be considered income to you, and you would have to pay taxes on the value of the waiver. We have estimated that, for the typical graduate student who receives 3 quarters of resident tuition waivers, this would increase your tax liability by about $1,400 per year. If you are not a resident of the state of Washington, it could be almost twice that, since the IRS is likely to consider the waiver of the non-resident portion of tuition also as taxable income. The good news is that this provision is not in the Senate version of the bill that was passed this weekend.
- The House version of the bill would also eliminate the ability to deduct the interest you pay on your student loans from your taxes, further increasing your tax liability. Obviously, the amount you can deduct depends upon how much your student loans are, and the interest rates for those loans. Again, this provision is not present in the Senate version passed this weekend.
(For a complete list of proposed changes in the Senate and House tax reform bill that are relevant to higher education, see this table.)
What is the UW doing about it? Please know that this issue has been and remains a top priority for President Cauce and the University. Here is a blog post she wrote about our concerns with the House bill. Also, she was in Washington, D.C., earlier this month meeting with the Congressional delegation directly to talk about the devastating impacts the changes will have on graduate students and, potentially, on the future of our nation if they prevent students like you from pursuing your education. As noted in the Seattle Times on Friday, President Cauce joined WSU President Kurt Schultz in asking the entire delegation to protect graduate students. Finally, our Federal Relations Office is working diligently with our Congressional delegation to describe the impact of these proposals on graduate students in the state of Washington.
Our first priority is and will remain preventing these changes from being a part of any final tax bill. But should these changes happen, we are also working to figure out ways to mitigate them. There are a number of potential actions the University could take, but potential solutions are complicated because each could be costly and require funding the University currently does not have. At the national level, many universities and professional organizations, such as the Council of Graduate Schools and the American Association of Universities are actively working on this, and have frequent updates on their websites.
What can you do? Please contact the Graduate and Professional Student Senate to volunteer for efforts to educate the public and Congress about these issues, and the impacts these provisions could have on graduate students in the state of Washington, and consequently on the many businesses and industries here that depend on a highly educated workforce to grow our economy. We will be working together with you to make this known.
David L. Eaton
Dean and Vice Provost
The Graduate School