New tax plan will devastate graduate students

New tax plan will devastate graduate students

US Capitol

The latest tax reform bill, passed this Thursday by the House of Representatives, will devastate American competitiveness in science and tech. The bill would see taxes on graduate students increase by, on order, a staggering $10,000 per year. The bill also includes a number of other measures that reduce the affordability of both graduate and undergraduate education.

I’ve heard more than one Republican gruff about how a university education leads people to become more liberal. True or not, I never imagined a concerted effort on either side of the aisle to drive our nation’s competitiveness into the ground by blocking access to higher education.

But that’s exactly what this new tax bill does. Here’s how.

Grad student “tuition”

Graduate students in STEM fields (science, technology, engineering, and math) receive stipends typically on order of $20-$35,000 per year.

Their university, at least on paper, also charges students tuition that typically ranges from $20-$50,000 per year.

This tuition fee is charged and simultaneously waived by the university (“tuition remission”), either through re-balancing internal funds, through research funds of the graduate student’s lab, or through the graduate student teaching part time for their department.

No matter the details, at the end of the day, this is money that the graduate student never sees. “Tuition” fees are actually a way to channel funds that enter the university from donors or research grants, and are used to maintain the department and keep the graduate program in place. (Graduate students are an excellent source of cheap labor. To say nothing of postdocs.)

“Tuition” helps grease the wheel of academic research, if you will.

“Tuition” fees are actually a way to channel funds that enter the university from donors or research grants, and are used to maintain the department and keep the graduate program in place.

The only true income for students is the stipend, which they receive as a fellowship, or in exchange for teaching or their work in a lab.

Tax plan devastation

The new tax plan would make that tuition suddenly taxable. Imagine you made $25,000 per year and were suddenly taxed as though you made $75,000. That’s what this tax plan does.

Using this calculator, for a single student, taxable income jumps from $1,724 to $11,889–an increase of over $10,000! That’s an effective tax rate of over 47.5%, leaving just under $1100 per month to cover all living expenses (not to mention undergraduate loan repayments).

Considering the average graduate student’s working hours, that’s less than minimum wage.

For someone with a Bachelor’s level STEM degree.

Graduate school was never lucrative, but this would be absolutely devastating to the potential graduate student pool.

American competitiveness in the crapper

Graduate students are the backbone of academic research. Their labor brings about the innovation that spawns companies and keeps the USA competitive.

Even more than that, graduate students feed the applicant pool of STEM workers that keep our country’s tech and biomedical industries churning. Academia is a pyramid scheme–there’s just not enough room for all PhDs to go on to be professors, even if they wanted to. Most end up in industry settings perhaps very different than their former labs. But their technical experience and the scientific tools and mindset that they developed during their graduate studies is invaluable.

Graduate students feed the applicant pool of STEM workers that keep our country’s tech and biomedical industries churning.

Companies are getting free, highly-specialized and advanced training for their employees, funded through public research grants. Research grants are the second largest contributor to total department funding at private universities, covering a large share of graduate student “tuition.” By taxing graduate students on that money, the federal government is essentially transforming young scientists from underpaid to sub-minimum wage workers.

The government is essentially transforming young scientists from underpaid to sub-minimum wage workers.

The students who will be hurt most by this tax change are bright minds from middle and low income backgrounds, who don’t have the means to supplement their salary during graduate school. The bitter irony is that these are the most under-represented folks in STEM.

I count myself among this group. My family is firmly middle class. I grew up in a cute little house in a safe middle- and working-class neighborhood. But without generous grants from my undergraduate university, MIT, and a stipend to support myself at UIUC for graduate school, I wouldn’t be in STEM right now. Not by a long shot.

Undergraduate students will feel the gouge too

Which brings me to undergraduate education. Staggeringly expensive and often only possible for middle and working class folks via loans. Even with a generous grant package, I left undergrad with a B.S. and over $20,000 in debt.

Under current tax code, the interest on those loans can be taken as a deduction. Over 12 million people took advantage of the deduction in 2015. Both the House and Senate plans would eliminate that deduction. Again, a tax change that hurts middle and working class folks the most.

What can I do to prevent these tax changes

Pick up a phone!

I know, cold calling sucks. But it’s really the only metric that politicians respond to. People who call are people who vote. It takes more effort than writing something on the internet (like this post, ha). So it shows that the issue really matters to you.

You can find out your representatives contact information here.

Read more on the new tax plan: Nature, Wired, and the New York Times.

Banner and featured image: Kevin McCoy|Wikimedia.

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