# What is the utility of taxing a university tuition waiver? **URL:** \ **Category:** Factual Questions\ **Created:** [November 14, 2017, 7:29pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635 "2017-11-14T19:29:50Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![lazybratsche](https://avatars.discourse-cdn.com/v4/letter/l/ba8739/32.png) [@lazybratsche](https://boards.straightdope.com/u/lazybratsche)\ **Post date:** [November 16, 2017, 12:26pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/41 "2017-11-16T12:26:36Z")
> [@The\_Lurker\_Above](#): > > I was under the impression that (at least in STEM) no, or almost no, graduate student actually pays tuition. Even the humanities PhDs typically get full tuition support, and a stipend. They just tend to be funded by TAs that demand a lot of work that’s unrelated to their dissertation. > [@](#): > > IE if I was rich and wanted to get a chemistry PhD I couldn’t decide not to do the whole TA/RA thing and just give the department cash. This actually happened in my program – a guy with a successful career on the business side of pharma (and a shit ton of money) decided to get a PhD that would help him understand the research side. There was also no doubt that he was qualified for the program. But it is super rare. > [@](#): > > So what would stop universities from dropping the theoretical tuition to zero (or some small nominal amount). Then if they want to move some of the money from the student’s advisor’s grants, increase some overhead item? This is, I expect, the real solution. I believe the $50k that’s on my 1098-T every year is mostly fictional. My advisor told me that their research grant only pays around a quarter that. I looked up the training grant for my program, and direct costs work out to $39k per grad student. That means the actual amount of money transferred from this NIH training grant to the university as tuition is ~$8k per student, after the $29k/year stipend and $2k/year health insurance. So perhaps the solution to this problem will be reducing tuition list price to something closer to the real world costs. After all, after my first two years I hardly used any of the university resources. $8k per year should be more than enough to cover the amount of time faculty devote to the program (i.e. 50% time for the two or three profs running the grad program, and the few hours of meetings per year with a thesis committee) library subscriptions, and… seminar snacks and toilet paper? I’m struggling to think of anything else I used that cost the university actual money. ---
**Author:** ![Nava](https://avatars.discourse-cdn.com/v4/letter/n/da6949/32.png) [@Nava](https://boards.straightdope.com/u/Nava)\ **Post date:** [November 16, 2017, 1:00pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/42 "2017-11-16T13:00:19Z")
> [@thelurkinghorror](#): > > I don’t know. I didn’t see any evidence that they were specifically targeting tuition waivers, but absence of evidence is not evidence of absence. > > [This](https://www.acs.org/content/acs/en/education/students/graduate/survey-of-phd-programs-in-chemistry.html)puts that at 42% My apologies, I should have been clearer. The original mention was of “foreigners” and that’s also what the ACS is talking about, where foreigner = not a US citizen or national. I was actually referring to foreign-national-born; immigrants, regardless of paperwork status. My own class included only one person who self-identified as American and zero non-US-citizen teachers, but there were three other US-citizens among the students (self-identified as Cuban, Persian and Colombian) and several foreign-born teachers (Spaniard, Polish, Chinese, Canadian) including the department’s director (one of the Canadians). > [@lazybratsche](#): > > This actually happened in my program – a guy with a successful career on the business side of pharma (and a shit ton of money) decided to get a PhD that would help him understand the research side. There was also no doubt that he was qualified for the program. But it is super rare. One of my undergrad classmates tried that and was told “we don’t care if you have more money than the IRS. A PhD qualifies you to teach and that means we require you to do some teaching. You have to ask for a TA position.” One of my grad classmates was paying (he was a professional musician; double undergrad in Chem and Music), but he’d been a TA for a year before he was allowed to pay in USD rather than work. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [November 16, 2017, 3:03pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/43 "2017-11-16T15:03:54Z")
> [@Nava](#): > > My apologies, I should have been clearer. The original mention was of “foreigners” and that’s also what the ACS is talking about, where foreigner = not a US citizen or national. I was actually referring to foreign-national-born; immigrants, regardless of paperwork status. The ACS 2013 Graduate Student Survey lists naturalized citizens at only 3.5%. 71.1% US native 3.5% US naturalized 2.1% US permanent resident 21.5% F-1 visa 1.9% Other visa Now that does include the 8% of chemistry grad students in masters programs. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [November 16, 2017, 3:55pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/44 "2017-11-16T15:55:08Z")
Answering OP, the “utility” is to degrade American higher education. Well-educated people are not good for an oligarchy. We do want to encourage fraudulent schools, OTOH: they reward certain entrepreneurs without the risk of creating informed citizens: > [@Senator Elizabeth Warren](#): > > When a predatory college breaks the law and cheats students—let’s say the school showed you fake information on their graduates “success” or promised you your credits would be good to transfer, but they weren’t—the law says students can get their student loan cancelled. _ **The Obama Administration cancelled the loans of about 32,000 students who were cheated by schools** _ like Corinthian Colleges and ITT Tech. _ **But Education Secretary Betsy DeVos has forgiven ZERO.** _ Tens of thousands of students mislead by shady for-profit colleges are just waiting for her to act. And in the meantime, they have huge debts hanging over their heads. Join me and Senator Durbin as we implore Secretary DeVos to help these students. ---
**Author:** ![Inner\_Stickler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inner_stickler/32/318_2.png) [@Inner\_Stickler](https://boards.straightdope.com/u/Inner_Stickler)\ **Post date:** [November 16, 2017, 4:56pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/45 "2017-11-16T16:56:10Z")
> [@septimus](#): > > Answering OP, the “utility” is to degrade American higher education. I appreciate your anger and I won’t deny I have similar emotional feelings. But what I was looking for is a more neutral analysis of the economic advantages or disadvantages of taxing tuition waivers, especially regarding how the proponents of the tax bill are defending it. And I want to thank everyone in this thread, especially those who have identified the relevant legislation and tax code and the thoughtful commentaries that have been provided. ---
**Author:** ![lazybratsche](https://avatars.discourse-cdn.com/v4/letter/l/ba8739/32.png) [@lazybratsche](https://boards.straightdope.com/u/lazybratsche)\ **Post date:** [November 16, 2017, 7:22pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/46 "2017-11-16T19:22:26Z")
> [@Inner\_Stickler](#): > > I appreciate your anger and I won’t deny I have similar emotional feelings. But what I was looking for is a more neutral analysis of the economic advantages or disadvantages of taxing tuition waivers, especially regarding how the proponents of the tax bill are defending it. I actually haven’t heard a single defense of taxing the hell out of grad students. To be extremely charitable (and naive) I still think that this is unintentional on the part of the Republican authors of the bill. I.e. perhaps they were rapidly combing through the tax code to remove deductions, and they had no idea that taxing remissions would impoverish hundreds of thousands of grad students, cripple US research, and inflate the cost of undergraduate education. Maybe there was some congressional intern whose only experience with such remissions was that one of their friends in a master’s program got a 25% tuition break for being a TA. Taxing those cases, while still counterproductive in my opinion, would not be as catastrophic. If I have time later I may take a stab at doing a Fermi estimate of how much this would fuck up the NIH-funded research I’m familiar with. ---
**Author:** ![Inner\_Stickler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inner_stickler/32/318_2.png) [@Inner\_Stickler](https://boards.straightdope.com/u/Inner_Stickler)\ **Post date:** [November 16, 2017, 7:25pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/47 "2017-11-16T19:25:14Z")
> [@lazybratsche](#): > > I actually haven’t heard a single defense of taxing the hell out of grad students. I didn’t find any looking at articles either and that was part of what prompted the thread. I do think the silence so far speaks volumes. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [November 16, 2017, 8:03pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/48 "2017-11-16T20:03:27Z")
So just the result of “SIMPLIFY ALL THE TAX THINGS”, perhaps? ---
**Author:** ![nelliebly](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nelliebly/32/5422_2.png) [@nelliebly](https://boards.straightdope.com/u/nelliebly)\ **Post date:** [November 16, 2017, 8:38pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/49 "2017-11-16T20:38:02Z")
> [@lazybratsche](#): > > I actually haven’t heard a single defense of taxing the hell out of grad students. > > To be extremely charitable (and naive) I still think that this is unintentional on the part of the Republican authors of the bill. I.e. perhaps they were rapidly combing through the tax code to remove deductions, and they had no idea that taxing remissions would impoverish hundreds of thousands of grad students, cripple US research, and inflate the cost of undergraduate education. . Then I’d say _rapidly_ combing through the tax code was irresponsible. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [November 16, 2017, 8:45pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/50 "2017-11-16T20:45:39Z")
> [@Ruken](#): > > So just the result of “SIMPLIFY ALL THE TAX THINGS”, perhaps? It doesn’t really do that, though. It takes something that’s not obviously income (a discounted or free tuition) and turns it into income. So, now, when figuring your taxes, you have to add in the amount of tuition discount you got (from some new form, no doubt, supplied by the government and filled out by the school) and then calculate your tax burden. So, instead of, “I received this amount of money, so I owe this amount in taxes”, it’s “I received this salary, oh, and on this form, I also have this new imputed income that I never received…” I think the only GQ answer is that there is a $1.5 trillion limit on the amount that can be added to the debt under reconciliation, so in order to pay for the various business and other tax cuts, Congress is scrounging around looking for whatever they can find. Anything else moves in the GD territory, in my opinion. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [November 16, 2017, 8:51pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/51 "2017-11-16T20:51:11Z")
You can theorize till the cows come home about what is considered income, or should be considered income, of resembles in this or that aspect another thing that might be considered income. None of this has any relationship to the utility of this provision to its authors: to stick it to them fancy-pants librul aaig-heds. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 16, 2017, 9:08pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/52 "2017-11-16T21:08:29Z")
> [@The\_Lurker\_Above](#): > > I was under the impression that (at least in STEM) no, or almost no, graduate student actually pays tuition. IE if I was rich and wanted to get a chemistry PhD I couldn’t decide not to do the whole TA/RA thing and just give the department cash. > > So what would stop universities from dropping the theoretical tuition to zero (or some small nominal amount). Then if they want to move some of the money from the student’s advisor’s grants, increase some overhead item? Non necessarily true. I know of one major private university with a big Masters program in engineering, where the students pay full tuition and very few have any sort of RA or TA jobs. (Information from seeing a few hundred resumes from this place.) I don’t know if those who have jobs get tuition breaks or not. It is likely true for those in PhD programs. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [November 16, 2017, 9:08pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/53 "2017-11-16T21:08:31Z")
@ **SteveMB** : Agree that’s probably pretty much the whole story right there. There’s a slight possibility that they were thinking chess not checkers just a little bit. So they loaded the original proposal with a few helicopters. These are sure to ignite righteous indignation in the opposition, but only represent 0.00001% of the actual extra money that’ll soon be flowing to the plutocrats. So after those pesky lefties get done whining the Rs can “give” them a couple helicopters then ram the rest of this silly legislation down the citizen’s throats while proclaiming their magnanimous negotiating record. If it looks like a helicopter and it chop-chops like a helicopter, it’s probably a helicopter. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 16, 2017, 9:14pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/54 "2017-11-16T21:14:36Z")
> [@puddleglum](#): > > In order to make income taxes simpler and fairer the trend has been toward treating in kind contributions as income. It used to be that people would receive fringe benefits such as company cars, or country club memberships instead of income as a way to get around the taxes. If a student has a job at the university and makes $30K per year why should they pay more taxes than someone who works for the university and gets $30K worth of tuition waivers? Both are income and there is nor reason to treat them differently. For graduate students - RAs or TAs - enrollment is a condition of employment. Senior PhD students often only take the “class” that involves research on ones dissertation, with maybe a seminar thrown in. Many companies have internal training, which gets billed by the training organization to the department the student is from. The student benefits. If tuition refunds are taxed, maybe these costs should be added to the income of the employee also. Will cadets at West Point etc. now be taxed for their free tuition? That would only be fair, after all. ---
**Author:** ![busterpickle](https://avatars.discourse-cdn.com/v4/letter/b/258eb7/32.png) [@busterpickle](https://boards.straightdope.com/u/busterpickle)\ **Post date:** [November 16, 2017, 9:37pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/55 "2017-11-16T21:37:39Z")
How are you guys getting these tuition waivers? Any ways, as someone who has a Master’s, who did not have any waivers or any stipends, and had to work FT; I don’t see a problem with this. Like, you are getting a stipend and living on campus or a cheap apartment? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [November 16, 2017, 9:46pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/56 "2017-11-16T21:46:19Z")
> [@electronbee](#): > > How are you guys getting these tuition waivers? > > Any ways, as someone who has a Master’s, who did not have any waivers or any stipends, and had to work FT; I don’t see a problem with this. > > Like, you are getting a stipend and living on campus or a cheap apartment? It’s hard to be in a PhD program and _not_ have a waiver IME. It’s not like I applied for anything. If I was teaching, the department covered my tuition. Otherwise it was paid out of the grant that was paying for my research. And yes, there was a stipend. You may have worked full time. That was not an option for us. Six 12-hour days in the lab per week was pretty much expected. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [November 16, 2017, 10:22pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/57 "2017-11-16T22:22:47Z")
> [@Voyager](#): > > For graduate students - RAs or TAs - enrollment is a condition of employment. Senior PhD students often only take the “class” that involves research on ones dissertation, with maybe a seminar thrown in. After you get your core classes finished, most take 6 or so credits that often don’t involve any additional work, but have to be paid for. As you say, this counts as continued enrollment. > [@electronbee](#): > > How are you guys getting these tuition waivers? > > Any ways, as someone who has a Master’s, who did not have any waivers or any stipends, and had to work FT; I don’t see a problem with this. > > Like, you are getting a stipend and living on campus or a cheap apartment? It’s common in the sciences. I wouldn’t say that it’s a certainty like some people are saying, but it’s the rule, not the exception. I’ve known professors who are paying an RA to forbid their grad students to get a job, as it detracts from the lab and research! research! research! If by master’s you mean MBA, MFA, etc. (my assumption when someone says “master’s” is MA or MS) then paying your own way might be more common in those fields. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [November 17, 2017, 3:51pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/58 "2017-11-17T15:51:49Z")
> [@lazybratsche](#): > > I actually haven’t heard a single defense of taxing the hell out of grad students. > > To be extremely charitable (and naive) I still think that this is unintentional on the part of the Republican authors of the bill. I.e. perhaps they were rapidly combing through the tax code to remove deductions, and they had no idea that taxing remissions would impoverish hundreds of thousands of grad students, cripple US research, and inflate the cost of undergraduate education. Maybe there was some congressional intern whose only experience with such remissions was that one of their friends in a master’s program got a 25% tuition break for being a TA. Taxing those cases, while still counterproductive in my opinion, would not be as catastrophic. > > If I have time later I may take a stab at doing a Fermi estimate of how much this would fuck up the NIH-funded research I’m familiar with. The defense is that grad students are being treated like everyone else. If someone gets paid $20K in cash and a car worth $20K then there income is not $20K and they get taxed on the full $40K in income. Same with grad students, if they are paid by tuition waiver, then that tuition waiver is part of their income and they have to pay taxes on their whole income like everyone else. I understand that grad students believe that they are too special to pay taxes but I see no reason why anyone else should agree with them. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [November 17, 2017, 3:58pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/59 "2017-11-17T15:58:35Z")
> [@puddleglum](#): > > The defense is that grad students are being treated like everyone else. If someone gets paid $20K in cash and a car worth $20K then there income is not $20K and they get taxed on the full $40K in income. Same with grad students, if they are paid by tuition waiver, then that tuition waiver is part of their income and they have to pay taxes on their whole income like everyone else. I understand that grad students believe that they are too special to pay taxes but I see no reason why anyone else should agree with them. Should all classes and training be considered imputed income? Any classes taken at work, Series 7 training for financial analysts, police academy for police officers? What about basic training for military recruits? Any management, networking, or interviewing classes that they have in office environments? I don’t know why the police think they are too special to pay for target practice and other police training, but I see no reason why anyone else should agree with them. ---
**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\ **Post date:** [November 17, 2017, 5:11pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/60 "2017-11-17T17:11:45Z")
> [@puddleglum](#): > > The defense is that grad students are being treated like everyone else. If someone gets paid $20K in cash and a car worth $20K then there income is not $20K and they get taxed on the full $40K in income. Same with grad students, if they are paid by tuition waiver, then that tuition waiver is part of their income and they have to pay taxes on their whole income like everyone else. I understand that grad students believe that they are too special to pay taxes but I see no reason why anyone else should agree with them. If it costs me $10K to buy health insurance on my own, but my employer provides it for free or just a few hundred dollars per month, is the difference income? Why should my employer offer an FSA that comes out of my pre-tax income rather than after-tax? [Previous page](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635.md?page=2) [Next page](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635.md?page=4)