Elizabeth Hewitt, VTDigger
Tatiana Gladkikh is in her first year of studying for her doctorate in natural resources at the University of Vermont. The 27-year-old, a Russian citizen, receives a stipend for her studies and work at the university. But a change to tax law that is under consideration in Congress could significantly increase her tax burden, which she said would put her in a financial bind.
“The money I’m going to have left for my expenses is, it’s nothing,” she said.
Under the tax reform bill the U.S. House passed earlier this month, students whose tuition is waived could see higher tax bills – which some say would be a significant barrier to their studies.
The change to the federal tax code would be a big shift for many graduate students and for students who receive tuition waivers through a family member’s employment.
According to Cindy Forehand, the dean of the graduate college at UVM, about 500 graduate students at the university have their tuition waived in exchange for teaching or research work – a third of the total number of graduate students.
Gladkikh is anxious about what the change could mean for her. As an international student, she is restricted under her visa from picking up a job on the side to earn cash.
“There’s not a lot of options,” Gladkikh said. “There’s no other income we can get. Our stipend is the only thing we have for financially sustaining ourselves.”
Rep. Kevin Brady, R-Texas, chair of the House Ways and Means Committee, explained the reasoning behind the measure in the House bill at an event at the American Enterprise Institute on Tuesday.
Brady said there is a question of fairness: Why should one student pursuing a higher degree not pay taxes on tuition that is waived, when another who is working and paying tuition has to pay income tax?
“Is that fair?” Brady said. “Same type of people pursuing the same great degrees, working equally hard, one tax-free, one not.” However, he acknowledged concerns raised about the provision and said lawmakers will take those into consideration. “As we move forward with the Senate in a conference committee, we’re going to address issues like that,” Brady said.
The measure is not currently in the Senate’s tax bill. That legislation passed the Senate Budget Committee on a party line vote of 12-11 Tuesday and is expected to come to the floor later this week. The change in the House bill would increase those students’ annual tax liability, Forehand said, though the total increase that each would see would vary. Many students are in precarious financial positions already, she said.
“It really is a kind of Spartan life, and you do it because you love the idea of creativity,” Forehand said. Forehand said the changes to taxation could dissuade some people from pursuing advanced degrees.
“It doesn’t take that much to push them to the point of, ‘All right, I really can’t do this,’” she said.
The university benefits from the research and teaching work of doctoral students, she said, calling it a “critical part” of the university’s reputation.
“The contributions that the students make to the institution are greater at some level than the impact they make on their own lives,” Forehand said.
Officials with the Vermont State Colleges, too, are wary of the proposed changes to taxing tuition waivers. The state college system has relatively few graduate students who would be directly affected – just 28 total between Castleton University and Northern Vermont University-Johnson.
However, the change in the tax law would also make the tuition remission benefit the college system offers to employees and their families taxable. According to Jeb Spaulding, chancellor of the state college system, more than 200 students use tuition remission.
The state college system initially offered the benefit as a way to attract and retain staff. Employees in all different roles across the system can have tuition waived for themselves or a family member.
Spaulding said the change in the law means students who use the tuition benefit would see their taxable income increase by between $10,000 and $11,000 annually. That, coupled with other changes around higher education finance Congress is considering as part of the tax reform proposal, could influence whether some people will go to college, he said.
“It will be a factor in people’s decision in pursuing postsecondary education,” Spaulding said. “You’re talking about a tax increase, not a tax reduction, on Vermonters that are not wealthy Vermonters.”
Spaulding said what he finds most troubling about the proposal is the speed with which Congress is acting. “The bill is moving pretty quickly, and we don’t even know what’s in it at this stage,” he said.
Gladkikh, the UVM graduate student, said the situation makes her feel “a bit hopeless.” As an international student, she does not have a representative in Washington she can contact. However, she is optimistic because she has seen many other students voicing their concerns.
“Hopefully something will happen that it won’t pass and we can continue with our research,” she said.