Graduate Students in the U.S. could face new tax

[MisterX]

The House Just Voted to Bankrupt Graduate Students
Harvard Crimson
Arstechnica

This seems very troubling. It seems like it could take a grad student's income from barely livable to unlivable, and possibly result in a massive reduction of graduate students. This would have ripple effects on the university system and R&D in general.

 

[ZapperZ]

This has happened once before, some time in the mid 1990's while I was a graduate student. For a year (or was it two?), the school gave us a one time-increase in pay at the end of the year to cover the taxes levied on our tuition waiver. That didn't last long after the provision mentioned in the article was enacted to the tax bill to exclude tuition waivers.

Obviously, politicians have very short memory, and they do not realize that the workhorse of research work are being done on the backs of these graduate students that survive on meager stipends.

Zz.

 

[Vanadium 50]

This will not last. Since the tuition waivers are largely paid for by the federal government anyway, this will generate little net revenue.

 

[ZapperZ]

This will not last. Since the tuition waivers are largely paid for by the federal government anyway, this will generate little net revenue.

Yeah, but do you think the politicians will realize that? They already do not seem to care that this tax bill will increase the deficit by more than a trillion dollars. What's a few more million of dollars in the hole?

But in the meantime, if this goes through, the researchers will have to put in higher overheads on each research funding that they seek, meaning there will be less money available to do the work.

Zz.

 

[phyzguy]

This will not last. Since the tuition waivers are largely paid for by the federal government anyway, this will generate little net revenue.

I'd like to think you're right. But our current government appears to pay little attention to logic or facts. To me this looks like a direct attack on "elitists" like those of us on this forum.

 

[Greg Bernhardt]

Friendly reminder to keep all general political comments and opinions out of this discussion and make sure all comments are directly related to the article. Let's keep this productive and civil or it will not last.

 

[Vanadium 50]

Yeah, but do you think the politicians will realize that?

Maybe not immediately, but they will get feedback from DOE, HHS, etc. The real question is how long it will take the information to percolate up through the agencies and across to the legislature. I asked some friends who are Feds about why AAAS fellows in the Congressional offices haven't provided a short cut for this information flow, and was told that relatively few of them work on the GOP side of the aisle. I don't know how true that is, but if accurate, it's short sighted.

 

[phyzguy]

Friendly reminder to keep all general political comments and opinions out of this discussion and make sure all comments are directly related to the article. Let's keep this productive and civil or it will not last.

Greg is right, of course. I apologize for my ill-considered comment.

 

[StoneTemplePython]

I have a question for the boss.

Friendly reminder to keep all general political comments and opinions out of this discussion and make sure all comments are directly related to the article. Let's keep this productive and civil or it will not last.

The original link really is not an article but an opinion piece. Is it even allowed?
- - - - - -
Characteristic of opinion pieces, I thought there were some things in there that are rather disingenuous, and it reeked of affect heuristic. For example, here is but one issue from it.

Some universities might be able to cover tuition for some students, but in so doing, they would be forced to decrease the total number of graduate students they accept.

Ignoring research grants for the moment, a more nuanced view is that outside an elite core of schools like MIT, Harvard, Stanford, Yale, and a few more who have $\gt 10Bn$ in their endowments, schools will have to materially re-budget and re-allocate priorities. You would anticipate something like a gross up mentioned by @ZapperZ. This can be easily approximated by a geometric series for those interested. The schools costs would increase by 10 - 15 k per student in the cases cited. Obviously schools with lower tuition (think state schools) would have a smaller dollar impact per student, though state institutions tend to be more cash strapped.

A very simple back of the envelope calculation suggests it will have minimal impact at Harvard and MIT, the author's institution(s). E.g. at MIT whose endowment is much smaller than Harvard's, you have

$13Bn$ endowment, that perennially outperforms. Assume it gets $4\%$ a year after inflation, which leads to $500MM$ of investment income per year. The increased costs of say $~15k$ per grad student times $~7,000$ graduate students is $\approx 100MM$ increase in costs per year for MIT. Very manageable for such an institution. Note historical returns at MIT are well above a real 4%. And part and parcel with having a big endowment is MIT doesn't run a deficit. (In terms of second order effects I could easily imagine a case where places like MIT and Harvard actual increase graduate admissions if this became the new normal -- it is only speculation, but it could make a lot of sense institutionally... why?)

You rarely see back of the envelope calculations like this in opinions and editorials, one of many reasons I don't read them. I only clicked the link because I thought it was an actual article.

My more nuanced take is, rather than "decimate American competitiveness" (qtd in op-ed), the measure could drive an even bigger wedge between Haves (universities with big endowments) and Have nots (i.e. all other universities).

That is, if it passes and stays in effect. The bill may not pass, or this provision could pass and then be canceled in a couple years as mentioned by others.

 

[Greg Bernhardt]

The original link really is not an article but an opinion piece. Is it even allowed?

Good catch. Indeed opinion pieces are prohibited. Does anyone have a strict report source they want to replace it with, otherwise we close shop.

 

[MisterX]

I am sorry for posting an opinion piece. Here are some other articles

Harvard Crimson
Arstechnica

I realize this is a politically charged issue. But if I had not posted this here I would not have learned from ZapperZ that this happened once before in the 1990s. It seemed like a relevant issue for the kinds of people that visit this forum and I'm not sure where else this discussion could take place.

 

[jtbell]

if this goes through, the researchers will have to put in higher overheads on each research funding that they seek, meaning there will be less money available to do the work.

In other words, the net effect would be a backdoor cut in federal funding for research. Unless, of course, overall federal funding for research increases by an amount sufficient to cover the needed increase in graduate-student support. This doesn't seem very likely, considering that the whole point of making these stipends taxable, along with eliminating various other tax breaks, is to help raise money to pay for tax cuts elsewhere.

 

[dipole]

This article may be illuminating:

http://www.people-press.org/2017/07/10/sharp-partisan-divisions-in-views-of-national-institutions/

A majority of Republicans and Republican-leaning independents (58%) now say that colleges and universities have a negative effect on the country, up from 45% last year. By contrast, most Democrats and Democratic leaners (72%) say colleges and universities have a positive effect, which is little changed from recent years.

Maybe rather than assuming the republicans are just too stupid to realize the impact of the bill on graduate students, we should assume that they know but just don't care, because likely their base doesn't care. And republicans are loyal to their base, not the general good of the country.

Either way, rather than waive tuition, why couldn't schools simply charge nothing for tuition for graduate students, eliminating any extra taxes?

 

[Bystander]

Either way, rather than waive tuition, why couldn't schools simply charge nothing for tuition for graduate students, eliminating any extra taxes?

 

[mfb]

It works in (continental) Europe ;).

 

[Vanadium 50]

And republicans are loyal to their base, not the general good of the country.

Unlike other politicians? Sorry, this is exactly the sort of crap that led to P&WA being closed. I think it's time to ask the mentors to close this thread.

 

[jim mcnamara]

We close shop. No opinion pieces please.