"The tax reform bill passed by Republicans in the House of Representatives on Thursday contains a provision that would, according to various news outlets and op-ed writers, 'bankrupt graduate students,' 'be a disaster for PhD students,' and 'hit grad students with a massive tax hike.' To modify a saying dubiously attributed to Mark Twain, predictions of the death of graduate education have been greatly exaggerated," Preston Cooper writes in an opinion article for Forbes.
"On the chopping block in House Republicans’ bill is section 117(d) of the Internal Revenue Code, which exempts qualified tuition waivers from taxation. Many graduate students work as teaching or research assistance while completing their studies; universities often waive their tuition and provide a small living stipend as compensation. The House plan would treat these tuition waivers as taxable income, which graduate students fear could lead to annual tax hikes of several thousand dollars.
Anxiety among graduate students and those considering graduate education is understandable. But what the narrative around this provision has missed is that the House bill does not touch another provision of the tax code: section 117(a).
This section provides that scholarships used to pay tuition and fees are not considered taxable income. The catch is that universities which provide these scholarships cannot stipulate that students work as teaching or research assistants as a condition of receiving them. This is the main difference between scholarships and qualified tuition waivers: universities can require students to work as a condition of receiving the latter, but not the former."
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Publication Date: 11/22/2017