# 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:** 5
**Author:** ![TruCelt](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/trucelt/32/523_2.png) [@TruCelt](https://boards.straightdope.com/u/TruCelt)\ **Post date:** [November 28, 2017, 9:03pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/81 "2017-11-28T21:03:48Z")
If you dig just a little into every bill the GOP has put out over the last ten years, you’ll find one very simple principle: entrenchment of the upper class. Making Grad school harder for kids who don’t have parental financial support fits perfectly with everything else they have done. Sickening, isn’t it? ---
**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 29, 2017, 6:04pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/82 "2017-11-29T18:04:08Z")
> [@RitterSport](#): > > Can you expand on this? The thread is about something that hasn’t been taxable income in the past (tuition discounts) potentially becoming taxable income. And, then asking, what is the benefit to the country of making that kind of discount taxable? > > Any reason why private school vouchers shouldn’t be considered taxable income? When a fire department saves your house, they are providing a service – should that be imputed income? Income is money or other valuables received for providing goods and services. If you don’t work for the school district then your receiving school vouchers is not income. If you don’t work for the fire department than receiving fire protection is not income. In the grad student case, the students are being offered a job. In exchange for their work they are offered something of value, tuition waivers. Therefore the tuition waivers are income. If your employer offers school vouchers or fire protection as part of your compensation then it is income. Simple and easy to understand. ---
**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 29, 2017, 6:14pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/83 "2017-11-29T18:14:03Z")
Actually it’s not quite that simple. Your mortgage or car loan bank writing off that debt constitutes taxable income to you. Despite the fact you’ve never worked for them providing goods or services. You’ve certainly outlined the general logical accounting definition. But tax law is all about tacking arbitrary exceptions plus and minus onto the neat logical categories provided by ordinary accounting. You may well be right that written-off mortgage balances and K-12 schooling logically \*ought not \*be taxable income. But one is and one isn’t under current law. And either could change to the opposite tax treatment at the whim of Congress. ---
**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 29, 2017, 6:27pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/84 "2017-11-29T18:27:30Z")
> [@puddleglum](#): > > Income is money or other valuables received for providing goods and services. If you don’t work for the school district then your receiving school vouchers is not income. If you don’t work for the fire department than receiving fire protection is not income. > In the grad student case, the students are being offered a job. In exchange for their work they are offered something of value, tuition waivers. Therefore the tuition waivers are income. If your employer offers school vouchers or fire protection as part of your compensation then it is income. Simple and easy to understand. Well, that definition (something received for providing goods and services) doesn’t seem right to me. Interest received from bonds you hold is considered income. Capital gains may be income, depending on the holding period. Social security is income, legal settlements may be depending on the circumstances, life insurance payments can be considered income if you don’t have an insurable interest in the life that’s insured. Debt that’s forgiven is considered income. What good or service did you provide in those cases? On the other hand, my employer offers lots of benefits that are not considered income, including paying for most of my health insurance and big chunk of life insurance, none of which shows up as income for me. And, for a long time, tuition waivers were not considered income. I would argue that income is what the tax laws say it is. Tuition waivers may be income if that’s what the law says. Similarly, tuition vouchers could just as easily be considered income. ---
**Author:** ![Colibri](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/colibri/32/1841_2.png) [@Colibri](https://boards.straightdope.com/u/Colibri)\ **Post date:** [November 29, 2017, 8:57pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/85 "2017-11-29T20:57:52Z")
> [@TruCelt](#): > > If you dig just a little into every bill the GOP has put out over the last ten years, you’ll find one very simple principle: entrenchment of the upper class. Making Grad school harder for kids who don’t have parental financial support fits perfectly with everything else they have done. > > Sickening, isn’t it? **Moderator Note** **TruCelt** , political jabs are not permitted in General Questions. No warning issued, but don’t do this again. Colibri General Questions Moderator ---
**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 29, 2017, 9:30pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/86 "2017-11-29T21:30:24Z")
I’m curious. Why are we assuming that the value of the services provided is commensurate with the amount of tuition? A university doesn’t say, “Let’s see, you’ll be teaching precisely one and five-eighths of an introductory-level course per semester, as the value of that work will exactly match the amount of your tuition.” ---
**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 29, 2017, 11:44pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/87 "2017-11-29T23:44:58Z")
I’m not sure we are. In my industry we receive “imputed income” on our W2 for the difference between the discounted price we pay to buy our company’s products and the lowest price the company offers that product to the public at large. The amount of “discount” that tuition waivers amount to versus the lowest retail price is certainly a computable number. It need not have any relationship to the effort of teaching. IOW: some grad student get $10K worth of tuition discounts vs. discounted retail price, and he/she is paid $12K for the labor of teaching undergrads. That person’s total taxable compensation is therefore $22K. Note I’m not advocating for taxation of tuition remission. I’m just explaining how the idea might be implemented within the existing structure of US income taxation. ---
**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 30, 2017, 1:06am UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/88 "2017-11-30T01:06:56Z")
> [@nelliebly](#): > > I’m curious. Why are we assuming that the value of the services provided is commensurate with the amount of tuition? A university doesn’t say, “Let’s see, you’ll be teaching precisely one and five-eighths of an introductory-level course per semester, as the value of that work will exactly match the amount of your tuition.” We aren’t. Graduate assistants are paid a stipend for their services, and they also receive a waiver on tuition. In my son’s case, the tuition is much higher than the stipend he receives. And a little checking shows that if they were combined and counted as income, it would be more than is earned by a full-time assistant professor in the same field. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [November 30, 2017, 1:55am UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/89 "2017-11-30T01:55:17Z")
> [@LSLGuy](#): > > IOW: some grad student get $10K worth of tuition discounts vs. discounted retail price, and he/she is paid $12K for the labor of teaching undergrads. That person’s total taxable compensation is therefore $22K. > [@kunilou](#): > > We aren’t. Graduate assistants are paid a stipend for their services, and they also receive a waiver on tuition. In my son’s case, the tuition is much higher than the stipend he receives. > > And a little checking shows that if they were combined and counted as income, it would be more than is earned by a full-time assistant professor in the same field. Yeah, more like $30k and $20k. The actual pay depends a bit on cost of living. ---
**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 30, 2017, 2:28am UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/90 "2017-11-30T02:28:51Z")
I was just making up round numbers to give **neliebly** a concrete example of the concept. I should have made that more clear. Thanks for putting more realistic figures into the thread. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [November 30, 2017, 4:13am UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/91 "2017-11-30T04:13:13Z")
> [@LSLGuy](#): > > I was just making up round numbers to give **neliebly** a concrete example of the concept. I should have made that more clear. Thanks for putting more realistic figures into the thread. I know. I would point out that the wage is very low, but not unliveable if no family and frugal. A full time grad student is also officially a 20 hour job, but it’s salaried so usually more time is put in. The tuition is generally higher, YMMV. ---
**Author:** ![Orville\_mogul](https://avatars.discourse-cdn.com/v4/letter/o/aeb1de/32.png) [@Orville\_mogul](https://boards.straightdope.com/u/Orville_mogul)\ **Post date:** [November 30, 2017, 12:15pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/92 "2017-11-30T12:15:29Z")
> [@kunilou](#): > > BTW, my son is a red, white and blue All American Boy. I would say that if you son is of Cherokee, Caucasian, and Andorian ancestry, he is probably entitled to some pretty sweet scholarships. 😃 ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [November 30, 2017, 2:16pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/93 "2017-11-30T14:16:31Z")
> [@Orville\_mogul](#): > > I would say that if you son is of Cherokee, Caucasian, and Andorian ancestry, he is probably entitled to some pretty sweet scholarships. 😃 A lot of schools are putting caps on Andorian admittance nowadays. ---
**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 30, 2017, 9:15pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/94 "2017-11-30T21:15:57Z")
> [@kunilou](#): > > We aren’t. Graduate assistants are paid a stipend for their services, and they also receive a waiver on tuition. In my son’s case, the tuition is much higher than the stipend he receives. > > And a little checking shows that if they were combined and counted as income, it would be more than is earned by a full-time assistant professor in the same field. That’s not universal, though. At the state university my daughter just got her grad degree from, students selected as TA’s get a stipend that’s applied toward tuition, and that’s it. Most graduate students use a combination of grants, stipends/waivers, and loans. According to [student loan hero](https://studentloanhero.com/student-loan-debt-statistics/), 40% of the $1 trillion student loan debt is used to finance graduate degrees. If lazybratsche’s figures are correct, and they certainly seem to be, this is an odd group to milk more tax money from, given the paltry $160 million revenue gained. I don’t know how much tax revenue would be lost under the GOP plan in terms of income taxes, assuming many of those would-be grad students will end up with lesser-paying jobs than those they would have had if they could have afforded grad school. Or is the supposition that most students will simply assume even more debt? ---
**Author:** ![Dinsdale](https://avatars.discourse-cdn.com/v4/letter/d/97f17d/32.png) [@Dinsdale](https://boards.straightdope.com/u/Dinsdale)\ **Post date:** [November 30, 2017, 11:04pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/95 "2017-11-30T23:04:56Z")
I may misremember, it has been 30+ years, but weren’t tuition waivers taxed before? My wife and I graduated law school in 86. We both had assistantships paying stipends and tuition waivers. She was a research assistant, I was a teaching assistant and had 2 research assistantships. All 3 of mine would’ve given me tuition waivers, but I just got 1. ☹ Did have 3 offices, tho! 😃 As I recall it, we paid taxes on our stipends, but not our waivers. But my vague recollection was that there was a change in the law such that the year after we graduated, tuition waivers were going to be taxed. Anyone have any memory/info on that? Of course, at that time, tuition was nowhere near what it is now. (I believe around $1300.) Like I said, this might simply be misremembering, but if so, my wife and I both misremember the same thing. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 1, 2017, 4:51pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/96 "2017-12-01T16:51:13Z")
> [@nelliebly](#): > > That’s not universal, though. At the state university my daughter just got her grad degree from, students selected as TA’s get a stipend that’s applied toward tuition, and that’s it. > > Most graduate students use a combination of grants, stipends/waivers, and loans. According to [student loan hero](https://studentloanhero.com/student-loan-debt-statistics/), 40% of the $1 trillion student loan debt is used to finance graduate degrees. If lazybratsche’s figures are correct, and they certainly seem to be, this is an odd group to milk more tax money from, given the paltry $160 million revenue gained. There are grad students and then there are grad students. Re: tuition waivers we’re generally discussing students in terminal degree programs. This is \*mostly \*a different pool from the graduate students who might be taking out loans, who are typically in professional schools or just getting a master’s. Now granted, when I was visiting programs I’d been accepted into, a chemistry PhD student at Emory with the typical full tuition waiver and stipend told me he was still taking out student loans “because I like to play golf.” So as always YMMV. ---
**Author:** ![Urbanredneck](https://avatars.discourse-cdn.com/v4/letter/u/ea5d25/32.png) [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)\ **Post date:** [December 1, 2017, 8:55pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/97 "2017-12-01T20:55:18Z")
> [@puddleglum](#): > > There are two ways to raise more money by taxes, raise rates or broaden the tax base. Broadening the tax base also makes collecting taxes easier. Politically it is easier to eliminate a bunch of loopholes at once so lobbyists and citizens do not feel their industry is being singled out. > 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. Thats kind of the way I see it also. I remember they were also taxing generous insurance programs. ---
**Author:** ![Urbanredneck](https://avatars.discourse-cdn.com/v4/letter/u/ea5d25/32.png) [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)\ **Post date:** [December 1, 2017, 9:01pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/98 "2017-12-01T21:01:04Z")
> [@SamuelA](#): > > Universities don’t pay taxes as it is, as nonprofit organizations, so this is irrelevant to them… They sometimes pay property taxes and other city or local taxes especially since they depend on the city for fire and police. ---
**Author:** ![Urbanredneck](https://avatars.discourse-cdn.com/v4/letter/u/ea5d25/32.png) [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)\ **Post date:** [December 1, 2017, 9:05pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/99 "2017-12-01T21:05:52Z")
Personally back when I was in college I wasnt so hot on the graduate teaching assistants anyways. They were given little or no teaching training and didnt do so well as teachers. Many could barely speak english. Being that they were working only for scholarships and basic stipends you really cant blame them for doing a weak job. I would much rather colleges used actual salaried teachers in the classrooms. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [December 1, 2017, 9:13pm UTC](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635/100 "2017-12-01T21:13:40Z")
> [@Urbanredneck](#): > > Personally back when I was in college I wasnt so hot on the graduate teaching assistants anyways. They were given little or no teaching training and didnt do so well as teachers. Many could barely speak english. Being that they were working only for scholarships and basic stipends you really cant blame them for doing a weak job. > > I would much rather colleges used actual salaried teachers in the classrooms. Many collegea use adjuncts, who are people with doctorates, but get underpaid and no benefits but often that’s all that’s available in the current market. One dirty secret about college level instruction is that even the full professors have almost no teaching training. Many have years of experience to know what works and what doesn’t, but most degree programs are for research first and teaching a distant second. [Previous page](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635.md?page=4) [Next page](https://boards.straightdope.com/t/what-is-the-utility-of-taxing-a-university-tuition-waiver/801635.md?page=6)