Below are some results from the Tuition Tax Survey I co-created with two current graduate students. The purpose is to determine exactly which tuition tax benefits graduate students used in 2016. Please ask your peers to fill it out to increase the reliability of the data!
Below are our tentative determinations on which universities are using section 117(d) vs. section 117(a-b) to confer tax-free tuition benefits. Under the proposed House legislation (not the Senate version), section 117(d) benefits would be eliminated.
Carnegie Mellon University
While the university has not (as of this writing) issued an official statement, a university administrator told the Graduate Student Assembly that all doctoral students (except those receiving outside scholarships/fellowships, e.g., the NSF GRFP) receive tuition waivers under section 117(d).
The GSA calculated how much additional tax doctoral students in various schools would have to pay and what their new net stipends would be if the House version of these benefits prevails and no other changes are made.
An announcement went out to all Cornell graduate students, which reads in part:
Cornell University does not rely on 117(d) for favorable tuition-related tax treatment of funded graduate students, who are considered students, not employees, at Cornell.
Because Cornell pays graduate students reasonable compensation for teaching, research, or other services they provide to the university, Cornell graduate students receiving a tuition scholarship are receiving a qualified scholarship as described under sections 117(a), 117(b), and 117(c) of the current tax code, provisions which are not proposed for repeal in H.R. 1. Thus, the proposed repeal of section 117(d), if passed into law, will not have an impact on how Cornell graduate students’ tuition scholarships are handled.
While the stipend for graduate students may be taxable under the current tax code, the tuition scholarship is not, and would not be affected by repeal of 117(d). As H.R. 1 is written, Cornell graduate tuition scholarships will continue to be treated as qualifying (tax free) scholarships under 117 (a), thus, there would be no change from current tax law that treats these tuition scholarships for students as tax free.
University of Iowa
Andrew McCubbin, a graduate student at the University of Iowa, wrote this summary:
The University of Iowa (and more broadly, the Iowa Board of Regents) treat tuition benefits for TA/RAs as qualified scholarships under 117(a) as indicated by their reporting of this benefit using the Hope Tax Credit form 1098-T and institutional documentation indicating such treatment. This was instituted after the University of Iowa graduate employee union bargained for and received a [tuition scholarship] (https://www.grad.uiowa.edu/
sites/gc/files/ GATSGrantsContracts.pdf) for graduate student employees in 2003. In Iowa, state law treats assistants as both employees and students. While this treatment may be unique to Iowa and the interplay between the state university system and state law, it is likely that this same mechanism would be applicable and available to other universities, public or private.
University of Maryland, College Park
Steve Fetter, the interim dean of the Graduate School, sent an email to graduate students on November 13, 2017, which reads in part:
I am particularly concerned with the possible repeal of Section 117(d) of the Internal Revenue Code, which contains a provision that allows universities to lower the cost of graduate education for their students by offering tuition waivers without these waivers being considered taxable income… At the University of Maryland, approximately 4700 graduate students, including almost all of our doctoral students, receive tuition waivers as graduate assistants or fellows.
University of Notre Dame
Laura Carlson, the Dean of Students, sent an email to graduate students, which reads in part:
Notre Dame does not offer tuition remission or tuition reduction to its teaching and research assistants. It offers tuition scholarships to its admitted students, regardless of their role. In cases where a student may cease to be a research assistant, the tuition scholarship remains. It is not a benefit of the assistantship. (Note: This is likely not the case for Assistant Rectors receiving tuition support as a part of their assistantship.)… At this time, we do not believe the majority of our students would be impacted by this specific change.
The Graduate School published a page “Tax Bill Potential Impact,” which reads in part:
The House bill proposes converting tuition assistance and waivers, currently tax exempt, to taxable status. They would count as income along with a student’s stipend. The House bill language on page 97 calls for eliminating subsection D of U.S. Tax Code section 117, which exempts tuition reductions and waivers for graduate teaching and research assistants.
Hundreds of graduate students serving Virginia Tech as GTAs, GRAs, and GAs, receive tuition remission, and the change could be a substantial hardship for them. The total cost of 2017-18 tuition and fees for a full-time graduate student ranges from $14,621 to $29,861. This range is dependent on a several factors, such as residency status, degree program, the campus the student attends, whether the assistantship is full- or part-time.
The Graduate Student Assembly has published these charts outlining the impact of the changes on the amount of tax graduate students pay.