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Republican-backed tax reform would tax graduate student tuition waivers as income and eliminate the tax credit for interest paid on student loans.
Friday, Dec. 1, 2017 | 2 a.m.
Republicans are working to pass the nation’s first tax reform since the Reagan administration, and graduate students are worried about being taxed out of the classroom.
The House and Senate are pushing two versions of tax reform. The House has approved its bill, which would tax graduate student tuition waivers as income and eliminate the tax credit for interest paid on student loans. The full Senate was expected to vote this week.
“It’s kind of difficult to prepare for something that may or may not happen,” said Jenessa Kenway, a doctoral candidate in literature at UNLV. “I’m certainly hoping that, like some of the other issues that they’ve tried to get votes on, this too will fall through.”
Republicans are pursuing tax reform after a series of failed attempts to scrap Obamacare. UNLV graduate student Autumn Widdoes and Kenway say they’d both be affected if waivers are taxed as income.
“If I had to suddenly pay more money out of my stipend to afford this increase in taxes, that would directly impact my ability to cope financially,” Kenway said. She noted that she is fortunate that her husband works and can help financially.
They said it doesn’t make sense to consider a waiver as income since students don’t actually receive that money. Widdoes, who is finishing up her master of fine arts degree this spring, says she lives with a roommate, which helps her live off the stipend alone.
“I receive an out-of-state waiver, which means that it’s a lot more than even in-state students,” Widdoes said. “(The waiver tax) would make it impossible for me to continue even at UNLV, which is a very affordable institution in comparison to a lot of institutions in this country.”
Under the House GOP tax plan, they say, some students could be taxed as earning $80,000 to $100,000 a year even though they only receive a small portion of that. Tuition waivers help cover classes while students receive a stipend, which can be about $15,000 annually and usually puts them near the poverty level, Widdoes said.
“Anybody in their right mind would know that you can’t do that to somebody,” Widdoes said.
Graduate students might be pushed to take out more student loans if the House GOP plan passes, Kenway said.
“You’d be paying out money out of the stipend toward the imaginary income that you don’t have,” Kenway said. “Anybody who has a job doesn’t actually pay the company to work at the job, and that is essentially what this is.”
The Nevada Student Alliance on Thursday passed a resolution opposing several of the provisions in the tax plan. The group is made up of elected members from all Nevada System of Higher Education schools and represents more than 100,000 students.
Alliance chairwoman Kanani Espinoza, president of the UNLV Graduate and Professional Student Association, says the House’s bill would negatively affect many students.
“We have many graduate students and Ph.D. students here that are on a (graduate assistant) stipend, and conduct research and that is their only form of income,” she said. “How (the bill) is currently presented would then tax them, which would be a burden on that student as their only source of income.”
Espinoza, pursuing her master’s degree in public administration at UNLV, says the association has been sending letters, making calls and meeting with officials such as Rep. Dina Titus, D-Nev. The GPSA council on Monday will consider a resolution similar to the one passed Thursday.
“We are worried that our students are going to have less of an enrollment rate,” Espinoza said. “Some students might not be able to continue their education.”
She said students who are currently in programs of study would probably have to get a full-time job on top of their coursework if the House plan becomes law. The association meets Monday, Espinoza said, and will discuss the next steps to oppose the tax reform bill. Some campuses have hosted protests and rallies.
“We’re not at that point yet,” Espinoza said. “Unfortunately our grad students only meet once a month.”
A congressional analysis estimates that the Senate’s version of the tax plan could increase the deficit by $1 trillion. To avoid filibuster in the upper chamber, the bill cannot increase the deficit by more than $1.5 trillion in the next 10 years, according to the Brookings Institution. Tighter rules regarding Senate passage could mean the House is forced to adopt the upper chamber’s version of the bill.
Republicans in the Senate have made many tax breaks for individuals temporary, expiring over the course of a decade, while corporate tax breaks would be permanent.
Nearly 77,000 graduate students in Nevada use the student loan interest deduction and save an average of more than $1,000, according to the Center for American Progress.
Sen. Dean Heller, R-Nev., has been a proponent of the GOP tax plan, while Sen. Catherine Cortez Masto, D-Nev., came out against the House plan and joined a group of lawmakers in urging a bipartisan process.
Espinoza, a full-time UNLV employee who would not be directly affected by this provision of the tax bill, said that regardless of whether tax reform passes, the group will send a delegation of students to Washington in January to lobby against the provisions negatively affecting students. The association’s goal is to mitigate the impact of the reforms as much as possible if they pass.
“If that does occur, I am 100 percent sure we will get together and try to figure out a plan to keep students in their programs and to keep this bill from harming them as much as we can,” Espinoza said.
The Nevada Student Alliance resolution opposes the House GOP tax plan’s elimination of:
• Educational institutions’ ability to provide tuition reductions free of taxable income, which would impede tax-free tuition waivers to graduate teaching and research assistants
• The option for employers to fund tax-exempt tuition assistance to their employees up to $5,250 annually
• The ability of NSHE institutions to acquire tax-exempt bonds to build, renovate, and add to existing infrastructure to enhance the college experience of the students of NSHE
