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A Political Economist Explores How to Respond to the Financial Pressures on Graduate Students

January 22, 2024 by Jill Hoffman 1 Comment

In this episode, Emily interviews Michael Dedmon, a PhD candidate in Political Science at Syracuse University and the Director of Research at the National Endowment for Financial Education. Michael’s research focus is in political economy, particularly in how governments respond to economic crises like the Great Recession and the COVID-19 pandemic. Emily asks Michael to share his view of what is happening in academia today as both a graduate student and a person with relevant academic expertise. They discuss how the strong labor market, high inflation, the lack of affordable housing, and constrained state and federal budgets for education and research are putting so much financial pressure on individual graduate students. Michael also explores the avenues for advocacy that are available to graduate students, such as unionization.

Links mentioned in the Episode

Teaser

00:00 Michael: Unionization is just one of the ways, right? That graduate students can really sort of band together, right? Really use that solidarity with one another and with graduate students across universities. To really sort of fight for a situation that really helps them reduce their vulnerability, but then also build a good financial sort of basis as they go into their career in academia, which is kind of a separate conversation. But we know that the challenge is right to. To living a financially secure life as an academic, are extremely challenging. So if you sort of start right from a negative as a graduate student, it sets you up for a lot of problems down the road.

Introduction

00:43 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

01:12 Emily: This is Season 17, Episode 2, and today my guest is Michael Dedmon, a PhD candidate in Political Science at Syracuse University and the Director of Research at the National Endowment for Financial Education. Michael’s research focus is in political economy, particularly in how governments respond to economic crises like the Great Recession and the COVID-19 pandemic. Michael shares his view of what is happening in academia today as both a graduate student and a person with relevant academic expertise. We discuss how the strong labor market, high inflation, the lack of affordable housing, and constrained state and federal budgets for education and research are putting so much financial pressure on individual graduate students. Michael also explores the avenues for advocacy that are available to graduate students, such as unionization.

02:02 Emily: The tax year 2023 version of my tax return preparation workshop, How to Complete Your PhD Trainee Tax Return (and Understand It, Too!), is now available! This pre-recorded educational workshop explains how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. Whether you are a graduate student, postdoc, or postbac, domestic or international, there is a version of this workshop designed just for you. While I do sell these workshops to individuals, I prefer to license them to universities so that the graduate students, postdocs, and postbacs can access them for free. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they sponsor this workshop for you and your peers? You can find more information about licensing these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Thank you so, so much for doing so! You can find the show notes for this episode at PFforPhDs.com/s17e2/. Without further ado, here’s my interview with Michael Dedmon.

Will You Please Introduce Yourself Further?

03:27 Emily: I am delighted to have joining me on the podcast today, Michael Dedmon, he is both a PhD candidate, Syracuse university, and currently an employee with the National Endowment for Financial Education. And he and I met at a conference this past summer, the higher education financial wellness summit, where I was listening to him give a presentation. I said to myself that man has a PhD. And so I approached him afterwards and found out, I was almost right, he’s almost to the PhD, Um, and yeah, so Michael, I know we’re going to have a fascinating conversation today. I’m really looking forward to it. Would you please introduce yourself a little bit further for the audience?

04:01 Michael: Absolutely. Well, first, thanks so much for having me. This is really a great opportunity that was totally unanticipated from that particular, uh, presentation. And I’m really thrilled to be here. Uh, well, I guess by way of introducing myself, uh, I’m from Colorado originally. That’s where I live. Currently. Um, I’m a 1st generation college student. Uh, and so by that extension, you know, also very much. So 1st generation PhD student, uh, I started off, uh, studying international relations at the American University of Paris. Uh, and then I studied in an MA in European politics at the European Institute at the London School of economics. Really, I had even gone into that MA level, really kind of wanting to focus on foreign affairs and international relations, but it was really kind of at that sort of stage where I really started to be pulled more in the direction of studying political economy after taking a few years off after the sort of starting with some early career research experience. I started pursuing a PhD in political science at Syracuse University. Where I’m currently a candidate, um, as a graduate student, you know, I got a couple of different, you know, sort of areas of research experience worked at a small research initiative focused mostly on international NGOs. And the Moynihan Institute of global affairs, uh, and then when I was more advanced in the PhD process, sort of started working in this field of financial security and financial education, uh, it started off at a smaller nonprofit in Brooklyn. Where I focused on identifying barriers to financial security for low and moderate income families, mostly in the New York City area and recently joined the National Endowment for financial education earlier this summer as the research director. And and I’m also an adjunct instructor in the political science department at the University of Colorado Colorado Springs. So, sort of maintain my academic connection in that regard.

Research Interests: Financial Crises, Financial Security, and Financial Education

05:52 Emily: So listeners, what we’re going to do with this interview is take all this fascinating experience and expertise that Michael has and ask him to apply it to the PhD population instead of the populations that he’s been typically studying and working with. Um, and since he has that personal experience being part of that population, I think it’s going to end up being a great conversation. Okay. So you went, uh, over that, you know, your CV a little bit. Is there anything that you’d like to dive in further and tell us more about that’s going to be relevant to our conversation today?

06:21 Michael: Well, I could maybe. Sort of start by talking a little bit about what really brought me sort of out of the academic, you know, sort of world and into this sort of field of financial security and financial education. Um, you know, I could maybe start by talking a little bit about what informs sort of my personal research interests, I guess, uh. You know, starting maybe with my, even my dissertation project and my dissertation work, uh, which is broadly speaking, sort of focused on the politics of economic crisis, specifically the politics of how and when governments choose to intervene to support individuals, families. Businesses really anybody in response to difficult economic times. I’m especially interested in how policy makers and academic experts. And politicians make sense of economic crises, how that sort of, you know, the frames, uh. Narratives the stories, the interventions that they think are necessary, uh, maybe have changed over time, uh, and what the political sort of determination of those stories that they find compelling are, um, my project specifically sort of asked this question in relation to the 2008 financial crisis, uh, and the recent economic consequences of the COVID 19 pandemic. Uh, you know, in 2008, we saw a certain type of discourse around what caused that particular crisis, how government should respond and what types of policies were needed to protect certain groups or certain firms or certain banks or businesses and then ultimately to get the economy back on track and, uh. Really, it was kind of my interest in how governments, how we, as people, how society makes sense of these types of crises and how the really serious consequences that individuals and families, especially people that are already vulnerable, uh, how they experience those crises and how that informs our politics. That’s really kind of what drew me, I think, into this particular field, which I would say is, you know, sort of the field of research and policy and advocacy that’s really focused on trying to understand the barriers that people. Uh, face to living their best financial lives and experiencing economic security and financial well, being, uh, and it’s been a really fulfilling experience. I think, to try to apply my academic interests, uh, both in the sort of policy and advocacy space. And then now, and, and, uh, I would say more of a broader, you know, sort of research, uh area looking at how financial education is just one out of many different ways that we can address economic insecurity and barriers to financial well being.

Financial Journey as a First Generation College Student

08:48 Emily: Of course, I love that working in the field of financial education for a number of years now. It’s so apparent to me in the last few years that there’s so much policy work that needs to be done, um, for us to even get to a point where financial education can be effective and can, it can really help people. So, um, I love that message. Um, would you like to add anything more about your personal journey through this period.

09:09 Michael: You know, I couldn’t agree more with you as well, just really about seeing financial education really is sort of existing within like an ecosystem, right? Of issues in the ecosystem of problems. Really? Uh, that our society sort of has, uh, is presenting to individuals and families to living their best financial lives. And I’ve definitely really experienced that in myself. Um, you Not just before, you know, being a PhD student and after being a PhD student, or at least, I guess, after being really focused on the coursework, but being a graduate student as well. Um, you know, for me, and my personal sort of finance journey is really informed in a lot of ways by being a 1st generation college student. Uh, you know, could even say seeing, I would say, I guess, the, the sort of financial and economic struggles that, uh, that my parents, I think, experienced not having attained that college education, uh, trying to figure out, I think, how they were going to find their place in a labor market that was. I guess, maybe presenting different kinds of barriers to them being successful. You know, I kind of come from a family, like a lot of 1st generation college students where, you know, the idea of going to college was presented a little bit as a non negotiable. Partly because of how my parents understood their own experience and their own struggles. Um, and then. You know, my academic research interests, uh, are really sort of informed by how I experienced the financial crisis sort of period and in the U.S. and in the advanced industrialized world specifically. I mean, I was still in college. It was junior. Uh, no, I was senior in college, I guess, in 2008. so I sort of graduated in the spring of 2009 into 1 of the worst labor markets, right? That there was, uh, And not really sure exactly sort of how I was going to make my way, like, apply the things I had learned and and really just sort of start my career. It’s part of the reason why I continued on right away by pursuing an M. A. because it seemed. No, like, a lot of us, it seems like an answer to that question of what I was going to spend my time doing when we were looking at such a difficult economic situation. So, even though I was studying something else, and, you know, at the time had kind of, I think I wrote my master’s thesis on the relationship between the European Union and Russia. Which, uh, funnily enough, at the time, a lot of people said it was a very boring topic. Of course, that’s not the case now. Um, but, uh, what really pulled me to toward political economy and trying to think about these issues of, of, uh, financial security and political economy in general is seeing the extent to which the financial crisis created so many difficulties, uh, for people to sort of find financial security after, after that event. And really just being fascinated with the, the political and policy conversation about How we made sense of something like that. How did we sort of understand the fact that the economy had, uh, experienced this shock? How did we make sense of trying to get the economy back to growth? And how did we make sense of the fact that that really didn’t happen right away in most of the advanced industrialized economies?

12:11 Michael: Uh, so that was really, and experiencing that myself, I guess I would say, right? Uh, even coming out with an MA facing a tough labor market, you know, I found myself struggling to pay rent, struggling to sort of figure out, I think, how to. To to get on the career ladder, uh, you know, working a retail job, you know, going back and forth, you know, to different interviews. I have this very, very clear memory of, um. Interviewing for a job, I think is like an office manager at a at a apartment complex and I kind of remember leaving my job at the gap. A little bit early and getting in the car and driving, you know, and then showing up at this apartment complex and interviewing with what had to have been like, 35 or 40 other people, all of us standing there and, you know, uh, you know, press shirts and ties, you know, for like, uh, an entry level office manager job. And I think that that’s, that’s the experience that a lot of people had really just kind of trying to figure out what their place is going to be in a labor market. That was really, really not recovering from the crisis anywhere near fast enough. Uh. Okay. So that was really, I think, uh, a really big inspiration for me to try to understand what’s the government’s role in responding to those types of crises. And why were the types of responses that we saw to the 2008 crisis not working? Right? And that wasn’t just in the United States that we were experiencing that. And that was countries across, you know, the United States and North America and Northern Europe, um, where my research sort of has taken me. But, uh, yeah, that was really just a really, really important part of my personal. You know, development that informed, I think, my future research interests and, and now it’s sort of become, uh, really central to my career.

Comparing the 2008 Financial Crisis to the COVID Crisis

13:52 Emily: What a vivid story. And I’m also thinking now about, you know, you made a comparison earlier, just that you’ve been thinking about the 2008 and 2009 financial crisis versus the COVID crisis that we’re having now. And I’m thinking about, um, someone listening to this podcast who is a recent college graduate and maybe graduated in 2020 or 2021. And how is what, I don’t know, can you tell us a little bit about generally over at the population level, how what they’re facing is is different or similar to what you and me and other of our peers experienced during that earlier crisis?

14:28 Michael: That’s a really fantastic question. Um, in a lot of ways, I think it really highlights how different the situation and the sort of post uh, landscape is compared to 2008. Um, And I think that should really cause us to ask a lot of really difficult questions, right? About why it is that, you know, maybe you and me, other people in our sort of, you know, cohort, uh, had such a different experience. Because 1 of the things that you really see, and I think we’re seeing additional evidence of this really every day, especially in the United States with additional sort of economic statistics is that the labor market situation that you and I faced, right? When we graduated from college, you know, in the early 2000s. Was one in which the premium, the benefit that you got from having an, uh, you know, higher education was certainly still there. But, um, the barriers that we were facing to really getting on the career ladder were really, really extensive. Um, there’s a lot of scarring in the labor market, meaning all of the layoffs really that had happened or the long term unemployment that people had experienced in the immediate sort of period after the financial crisis took a really, really long time to recover in the United States. There’s a lot of different explanations at the time for why that was. Uh, right you had a lot of people that were focusing on saying, well, maybe the unemployment insurance that the government offered in response to the crisis was too generous, right? It was keeping people from from taking additional jobs. I think we can kind of look back and see, especially given the extent of unemployment insurance, I guess, uh, generosity in the 2020 COVID crisis. That is a really, really difficult explanation to take seriously.

16:03 Michael: But anyway, there were a lot of different reasons why economists sort of trying to understand why the labor market was taking so long to recover and why it was so difficult, even for people with college educations to really get on the career ladder and get a job that was going to pay them a living wage so that they can pay rent and pay the other expenses they needed. One of the biggest differences is that in part, because, uh, the government took a much more active role in responding to the downturn, uh, that was sort of caused by the COVID 19 pandemic that the labor market did not experience that same type of slow return to normal. After 2020, in fact, you sort of saw the opposite, right? Businesses had trouble hiring folks. They had difficulty hiring people to fill the jobs, which, uh, had a really, really beneficial impact on wages. Also, just something was completely different from what happened in the after the 2008 financial crisis. You had a labor market situation, which was incentivizing businesses. To try to pull people into those jobs, so they were offering higher and higher wages, right? This is sort of where you saw, you know, people getting offered 15, 16, 17, even in some places to work, uh, you know, places like McDonald’s coming after a number of years where fast food workers were trying to organize and demand, right? A 15 minimum wage in those same jobs. And we’re experiencing a lot of barriers to making that a reality. So on the one hand. The government’s willingness to spend a lot of money in response to the 2020 pandemic to try to make sure that vulnerable people specifically, uh, didn’t lose their homes. Didn’t lose housing. Uh, didn’t get too far behind on making payments on their debt or their mortgages or other types of, uh, you know, that’s that they had. Really put the economy in a much stronger position to recover afterward and in terms of facing, you know, labor market opportunities is 1 of the best ways to see the positive impact of that response.

17:56 Michael: And so, I mean, I don’t know. I’m interested to kind of know what you think as well. Talking to so many folks who are sort of leaving the, the, the graduate school situation and thinking about their finances. But I would say that on the whole, I think people are facing a very different type of labor market now that are not experiencing the same type of restriction of opportunities. That we experienced after the 2008 crisis, that’s not to say that they don’t also face a lot of difficulties, right? In terms of. Making the most out of their careers, earning a living wage, feeling like they have what they need to live their best financial lives. But in terms of the. Barriers they’re facing in the labor market. It’s really not quite the same.

18:36 Emily: Well, I was thinking about so I entered graduate school I should say I entered PhD training plans to go into a PhD program in 2007, which is when I graduated from college So it was just before so I was kind of safely ensconced in my PhD program by the time things really started going downhill in 2008 and I say safely because my lab happened to be well funded which obviously is a very real concern inside academia my lab in the area it was in, we had funding, my, my funding was secure during that time. I don’t have any statistics on this at all or even anecdotes, but I’m just wondering if, you know, comparatively the stronger labor market, as you were talking about, um, didn’t incentivize people to go into academia to start those graduate programs and start the PhD programs in the last few years in the way that, again, we experienced back in 2008, 2009, 2010. Um, Um, yeah, so I’m just kind of thinking about maybe the different pressures on people and when they can choose to go into a job that would be satisfactory to them, then maybe earning a decent amount of money and they think, Oh, I was sort of interested in going to graduate school, but I can put that off for a few years and I’m going to work this job for now. Um, I don’t have those numbers on whether or not enrollment has decreased in the last, you know, couple of years compared to 2019, for example. I don’t know if you have looked into this at all or have any thoughts about this.

The Labor Markets Impact on University Enrollment

19:51 Michael: Yeah, that’s a really interesting point. I definitely can’t really. Speak very confidently, uh, at the graduate level, but especially because I’m teaching undergraduates right now, you know, the regional campus of a state school, I can definitely say, uh, that, you know, the University of Colorado system in particular is, uh. Definitely not experiencing the same type of enrollment surge that they saw after the 2008 crisis, especially at the undergraduate level, even campuses like ours here in Colorado Springs. I wouldn’t say, like, struggling with enrollment. But definitely having to ask some, some really difficult questions about what the future of, uh, right of enrollment is going to look like serving students best, helping them get the training they need for their future careers. But I think you’re exactly right that that those students are not feeling the same types of pressure and especially with the increase in wages that we. I would say that, you know, we at least saw in the 1st, few years after 2020, uh, the wage increases are sort of, uh, I would say, uh, leveling off now, partly because of the monetary policy response of the Federal Reserve and the increase in interest rates, which it was the goal, right? The goal was to sort of slow down that economic growth and see those wages, uh, not grow quite as fast. Um, but just the fact that wages were growing at all. After 2020 in the way that they were definitely presents people with a different set of opportunities. Um, and then I know this is something that you are very interested in and your podcast offers a lot of, uh, really important context, uh, around, but especially students that are looking at the trade offs between taking out debt to pay Right for their education, and then sort of considering that trade off in the context of what they can earn in the labor market. Uh, that’s becomes a little bit more difficult. Right of a choice. Um, and like you had said, if they can make the choice to put off right, getting additional credentials for a little bit, because of what they’re able to to do in their careers outside academia, uh, I definitely think that that set of choices is very different now for folks than it was in 2008, 2009, 2010.

21:57 Emily: I’m so curious and this is not a question for you, but I’m so curious to see how this new SAVE plan for federal student loans is going to impact people’s decision making around whether to enroll in school and how much debt to take out when there’s, um, you know, we’ve, we’ve eliminated with this repayment plan, the negative amortization that was so, so painful, um, for so many people on the back end of their degrees. And without that, I feel like the risk of taking out debt is much, much, much less now. Okay. The risk of the SAVE plan, we don’t know. Politically, we don’t know how long it’s gonna stick around for, but it’s, it’s here for the moment. So I’m just curious how people’s decisions are going to change around that.

Unionization Movements in the U.S.

22:33 Emily: But the next question for you, since we’ve started talking around, um, academia and versus the labor market and so forth. Um, I’m curious what your thoughts are around the unionization movements going around the U. S., around, that is to say, around graduate students, um, unionizing, and also how like stipend levels are, are being affected by this like strong labor market. I don’t know if you have any thoughts or data or speculation around that, just how academia itself and the graduate students going into academia and staying in academia are affected by these larger economic forces.

23:09 Michael: Yeah, there’s so many, I mean, even just the way that you said that affected by the larger economic forces is such a great way of framing that issue because there’s so many different inputs, right? I think into, uh, the way that universities and the way that even departments are trying to figure out how they can do, uh, right by their graduate students, um, but also how they can attract, right? The best type of candidates that they, that they, uh, that they want. Um, I think that 1 of the ways that I think about this. Thanks. Of course, it’s just starting by thinking that graduate students on the whole experience of a lot of really specific vulnerabilities, right? Um, any type of event or situation that doesn’t conform to a more traditional sort of academic experience can also, like, really exacerbate those, um, coming into a, you know, a graduate program, something we both know. Well, there’s a lot of expectations, right? That are sort of carried over from. Decades and generations of the way that the graduate student experience is supposed to work. Specifically, right, like, figuring out how to live a decent life right on the graduate students stipend is who identified as kind of, like, the biggest thing that a lot of students have to face. Um, that includes trying to figure out how to pay rent, especially when, you know, rent inflation is out of control and most metro areas in the, in the U. S. including in places like Syracuse that traditionally speaking, right? Have had pretty depressed housing markets because of. Um, so. A lot of different dynamics of, uh, of, uh, economic vulnerability at the community level, right? That go back, you know, since the 1970s. Um, but as students are facing that, I think that that’s sort of combined with a lot of other, you know, sort of issues and concerns around equity and justice in general. Right seeing universities as being primary sites of contesting. A lot of those questions have really motivated a lot of graduate students to really participate in and unionization efforts to really try to not just have living wages, but also try to address other issues of fairness in the, in, in either their specific discipline or just in the, in the field more generally, um, you know, I can say from my own department, uh, we had a year’s long sort of unionization drive. Um, That kind of went in fits and starts and took a really kind of long pause and then I’m, I’m advanced enough of a student now to sort of be outside of the bargaining unit, but they just recently were able to, uh, to to to get that union recognized, uh, which is a huge achievement for them. And so at least still being part of the department and seeing how those conversations and negotiations are proceeding. You know, I already can look back and see how different that would have made my life right when I started in that program to know that there was a possibility of increasing the stipend on its own. But then a lot of other ancillary issues, right? Like. Uh, at what level is the department going to cover your health insurance premium? Uh, when I started in the department, uh, you know, I can’t remember now, but the percentage was really low, but even, you know, as as I became a more advanced graduate student, I could see that that was 1 of the ways the department was really trying to sort of reduce the, the cost right on students is by saying, well, if you are on a TA-ship, if you’re on an RA-ship, you know, we’re going to start covering that premium in full. Including in some cases for for other members of your family, which, you know, that’s a huge benefit that we identify with, like, a solid career job. Um, that maybe as a graduate student is kind of an afterthought. I guess also, of course, depending how old you are when you come into a program, um. But that makes a huge difference financially for folks, right? To not have to pay. You know, 1000, 2000 dollars and a yearly health insurance premium that, of course, you’re required to have. Uh, so unionization is just one of the ways, right? That graduate students can really sort of band together, right? Really use that solidarity with one another and with graduate students across universities. To really sort of fight for a situation that really helps them reduce their vulnerability, but then also build a good financial sort of basis as they go into their career in academia, which is kind of a separate conversation. But we know that the challenge is right to. To living a financially secure life as an academic, are extremely challenging. So if you sort of start right from a negative as a graduate student, it sets you up for a lot of problems down the road.

Commercial

27:35 Emily: Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac, is PFforPhDs.com/tax/. From that page I have linked to all of my free tax resources, many of which I have updated for this tax year. On that page you will find podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs and PhDs-to-be. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. Again, you can find all of these free resources linked from PFforPhDs.com/tax/. Now back to the interview.

Impact of State and National Politics on University Funding

28:27 Emily: I’m thinking now about. The comparatively strong labor market, surprisingly strong coming out of a crisis, um, perhaps competing with graduate school for talent, right? I’m thinking about the unionization movement, which is putting more pressure on universities to pay better wages and get better benefits and so forth. Um, but then more to your, I think, uh, research experience, I’m curious about the national and state level responses to these pressures, right? Because the funding for academia comes partly from the people participating in, like the tuition and so forth, but it also partly comes from the federal and state governments through grants and, and, uh, the state funding for public universities and so forth. And these, these pressures are, are coming against one another. And I feel in some sense, like graduate students and postdocs are the people, um, who get left behind. In these pressures, right? So can you talk about, like, sort of based on your research and how, um, you know, governments can intervene in crises, like what you see as potential, um, uh, pressure release in, in this, in this area? Uh, I hope that made sense to you.

29:34 Michael: No, absolutely. No, and you’re so right. And, you know, again, there’s so many different levels that you can, you know, sort of analyze that on the one hand, you know, you sort of pointed to. The relationship between state level government and funding levels at state universities in particular, which affect stipends for graduate students and segments for postdocs directly the number of, you know, funding opportunities for graduate students to support their research, which helps reduce their time to degree, uh, you know, the number of services the university is able to offer, uh, to graduate students from, you know, um, Health, it’s not even just paying for health insurance premiums, but it’s just health services, you know, overall, um, going from that all the way to whether or not universities are able to provide child care support to students and to graduate students and even to faculty and other people who work at the university, you know, as you had said, like, all of that’s tied to the funding situation that the state university has. You know, and of course, that varies on a state by state basis, right? We see some states like the University of University of Wisconsin system. It’s really, really struggling with the sort of domestic politics of the of the state in general to to sort of figure out a funding model that really makes it to where they can support all of the good work that they’re doing across all their campuses. But Colorado struggles with that too, right? Trying to figure out how to really create a sustainable funding model for the state university system in the long term. So, that’s at 1 level that I really sort of see, as you had said, like, states being able to appropriately fund their state university systems. Interacts directly with graduate students and their sort of financial security and of course, like, how that impacts their, their long term career prospects. Um, but there’s also these other situations that really very also for graduate students to, um. That they’re existing, not only in a university community, but existing in a community that has all of these other dimensions, right? So the cost of housing, right? And a particular university community varies widely. And I think about this, even in a situation in Colorado, where you have the University of Colorado at Boulder, our sort of flagship research university is in one of the most you. If not the most right expensive, uh, sort of residential area on the front range and, uh, you know, I’ve never lived in Boulder, but I can’t imagine how challenging that is for the university to both attract graduate students and then for graduate students to figure out how to make the stipends that they’re receiving go as far as they can without having to choose to live 20, 30 minutes away right from from campus, which is. Not practical, right? Especially in the early years of your graduate student experience. Just even if we were to focus on, like, how much like, the cost of housing, right? Gets eaten up, uh, or eats up the sort of graduate student stipend. Um, that’s obviously something that universities can’t really do a ton about, right? That’s more of a role for, uh. For local governments or for state governments and can definitely see how the politics of that is really playing out in Colorado, an area where had a ton of influx of people since the pandemic that rent inflation is really, really high here. And we’re struggling, honestly, in a lot of ways to figure out how to how to control that.

Local Government and the Affordability and Availability of University Housing

32:38 Emily: I’m curious then, so I’ve noticed, um, there’s been struggles over, um, universities providing housing for, for undergraduates and graduate students, right? We’ve seen in, I can’t remember which UC is it, whether it’s Berkeley or another one, but um, struggles with local government in terms of permitting for additional, um, Student housing to be, uh, built. I know also at Vanderbilt, they opened up new, um, student housing a couple year or two ago, I think, and the students were very disappointed that the housing seemed closer to market rate and for a luxury apartment than like what was affordable for the students themselves. So the universities have some agency here, but they still have to play, as you said, with the local communities in terms of the permitting and everything. And, of course, the funding for those kinds of building projects.

33:27 Michael: Yes, it’s interesting points, because you’re exactly right there, too, that, you know, the permitting issues, just the space, you know, sort of issues I think about different university communities that I’ve lived in between, you know, Syracuse. This is a completely different situation, right? Then, uh. As you had said, right, the, for, for Cal, like, in a city like Berkeley, or I lived briefly in Ithaca, you know, thinking about Cornell really struggling also with kind of figuring out where to even build right housing. If they, if they were able to for and making that available to graduate students and how the funding model works for that. So, that is a really great point. Maybe I, even in my sort of answer, letting universities off the hook a little bit too much. But in the same way, right there, like, you had said that there’s a lot of complex issues that. That they have to work with sort of the local community to figure out what is available to them. And I know that in Colorado, you know, this is relevant for us in the sense that we’re going through sort of a statewide conversation about permitting reform and there was, uh. You know, a bill that was passed by the Colorado state legislature to to really try to give local municipalities more power to change their zoning laws to build more affordable housing that ultimately was, uh. Was I believe vetoed by by by governor polis in part, because there was just so much opposition to it at the, the municipal level. So we’re going to try to sort of, I think, figure out how to proceed. But, uh, you know, we’re obviously not the only state that’s really struggling to sort of figure out the balance between Local control and state level control, uh, over, uh, zoning regulations, uh, to really try to incentivize, like, actually affordable housing or just more housing. Right? And, uh, so, yeah, lots of really complex layers there, but it has really, really, uh, serious impacts right on how graduate students figure out their, uh, their sort of budgets throughout their, uh, throughout their graduate student career.

35:17 Emily: And this is making me think about prospective graduate students, um, looking at, and I usually think about this actually, and this is not the full picture, right? I think about it as a snapshot in time. What’s the current cost of living in this particular city where I’m considering attending for my PhD, and what’s the stipend at this moment? But to be really comprehensive and fair, we have to look at the trends. Um, and whether, you know, states are struggling to, um, to really financially support the universities. And that means that the stipend raises not, might not be keeping up with inflation going forward. We need to look at housing and how that is trending and whether or not something like on campus housing is being provided or might be provided in the future. And just, I’m just thinking about a prospective graduate student, like, You know, for me, when I was applying to graduate school, like taking, you know, a day or two and visiting a campus where I might devote the next five, six, seven years of my life and, um, how much, uh, really should go into that decision on the financial side and how difficult it would be to collect all that information. for every single university you’re considering and really understand it. It’s such a, wow. It’s a really complex problem.

Inflation and Financial Pressures During Graduate School

36:26 Michael: Yeah. You said it so well. And, uh, the time inconsistency situation is tough for graduate students because you’re exactly right. You’re coming in with sort of a quoted time to degree. You’re trying to plan your life out in that block. Um, and before you’re even talking about all the other changes that happen to you in your life, right. New relationships, you know, you have a kid. Other types of situations that happen to you and your family, you know, you live a whole lifetime really, especially at that age, right? Coming in and thinking about your 5 to 7 years before you’re finished. And then you have to make a decision about how you’re going to make the finances work. And you’re exactly right that. You know, the stipends don’t keep up and, you know, we are, we’re also living in a period where we have gotten used to, uh, cost of living inflation. Overall, not really being a huge pressure, right? Rent inflation. You know, the inflation of the cost of education cost of health care, you know, these things were always really difficult for for people that were early in their careers. But then you think about after the, the covid pandemic, and now we’re experiencing inflation on like a. A much more wide scale level, right? It’s like graduate students thinking about the cost of groceries going up, right? That’s not really something that if you went into graduate school in 2018, 2019, you really were thinking about. And, uh, I guess the only thing I’ll say for, for me is that this, I think highlights the importance, I think, of being able to really build that solidarity with other graduate students within a union. Because that’s where you really have the ability to to present that United front to your department of the university and say, look, these are the pressures, right? That we’re experiencing. This is the value that we’re offering to the department of the university through our work. And, uh, and we are going to work together, right? To come up with a solution that makes it to where we can have. A living wage, while we’re also sort of continuing to pursue our studies, um, and then linking that sort of struggle with other people in the economy. Right? I mean, these graduate students are joining, you know, the service employees in a national union. You know, some graduate programs are joining the United Auto Workers, right? I mean, they’re building solidarity. I think with other workers that are experiencing those same pressures. And it’s really inspiring. And I think it really is a really big part of the solution. I think at least from a graduate student perspective on getting to a point where can really make the finances, finances work. But your, your point about timing, I think it’s like, so it’s so true. Right. And so, so real on an individual level, especially.

Shifting University Funding Models to Better Support Grad Students

38:45 Emily: I love your point about the, the power of the unionization movements and the unions that are already in place so much. I almost wish we could end the interview right there, but I have kind of like one more question, um, which is so with unions. You’re talking about advocacy at the very local level, and then of course we’re bridging to advocates and other, um, branches of that union. Uh, but I’m also thinking now about, you know, we just talked about funding from the state level. I’m also thinking about funding from the federal level, which in my field, like in the biomedical sciences, is what they do in academia, in graduate education, is so dependent on the National Institutes of Health and other federal agencies funding. And so I’m thinking about also, like, Okay, we want graduate students to be paid, not just a living wage, in my opinion, much more so they can do even more with their finances and actually have some financial security. More than the living wage. Also, other people in academia, you mentioned the pressures don’t end with graduate school. It extends into faculty and administrators as well. More funding is needed for the whole system. I think if we decide as a country and as a planet that we really value what’s going on in academia. Right? So I think the advocacy has to also be at the state and national level as well, um, to increase the budgets again, if we decide as a society that what we’re doing in academia is valuable. Because. If society does not decide to value it, then academia has to shrink because the pressures on these lowest levels, as I said, the financial pressures are just too much, too much to bear and you’re driving people away at this point. That’s how I see it. What do you think?

40:14 Michael: Yeah. I couldn’t agree more. Um, I completely agree with you too, that it’s a national level question, right? And I think that this is at least from my perspective, one of the helpful insights that you get. From the political economy, sort of, you know, perspective coming within the political science discipline is that you see how these things interact with so many other things in our economy, right? Thinking about how we train people at the university level, what sort of skills we want them to have, who’s doing the training, right? Who’s gaining the skills to actually play that role of being those teachers. And that’s even before getting to the, to the other issues, you know, you know, a lot better than I do. I think coming in the biomedical field You know, who’s the ones who are investigating the types of advances that are going to help us solve the biggest issues that we’re facing, whether that has to do with, uh, you know, avoiding pandemics or responding to climate change or whatever it is. Right? And you’re exactly right that it’s a choice about whether or not we value that as a society and taking seriously what that looks like. And I think that both of us know quite well that, like, at the individual level, we’re not really just talking about having more access to funding for individual research, but that is a huge part of it. That empowers graduate students to be able to not only do their best work, but to be able to really focus on the work that motivates them. Right? Which gives them space for creativity for solving problems for asking questions. And it’s not to say that, like, you don’t gain a lot from teaching doing other research and that kind of stuff at the same time that you’re doing your own, but it is a lot of pressure. And a lot of the most successful, uh, you know, people emerging from graduate school are folks that didn’t really necessarily have to deal with those pressures in quite the same way. It’s 1 of the benefits of going right to 1 of the top programs is having access to more funding. And so you imagine what it would be like if. Everybody right going to graduate school has access to that same type of support, or at least. A lot more support and, uh, absolutely funding coming from the, you know, the National Science Foundation and other types of, uh, you know, federal sources of funding like that to really, really fund a wider range, right? Of research projects. And there’s also, you know, questions here related to what types of folks are getting, what types of funding and are we really supporting also marginalized voices in the academy that are really focusing on important questions, asking questions about. Yeah. You know, either the history, or the experience, or, uh, you know, of marginalized groups, uh, in our economy and in our society already. Right? Those are not necessarily the types of, uh, projects that get the. They’re the top choice for funding, um, because they’re more difficult questions to answer. So there’s, there’s a number of different benefits that we would experience at a societal level, um, from really embracing, uh, a university funding model That is actually oriented towards what we want to get out of universities, instead of just seeing them as sort of factories to train people with the skills to make them successful in the economy as important as that is. Right?

43:05 Emily: I think about universities, both the product of a university that you just mentioned, people are the product, trained people, but also the research itself is a product. And graduate students do both of those things, right? They’re becoming those trained people and they’re also generating the research that is disseminated and helps on a much wider basis. But as you just said, if they can’t focus on the work that they’re there to do and then the skills they’re there to, um, to develop in themselves, like we’re really, we as academia, we’re really hamstringing ourselves by not supporting those trainees, um, financially and in other ways to the greatest extent they can so they can flourish. Um, I’ve been thinking recently about Maslow’s hierarchy of needs. So like at the top, like self actualization, like. That’s where we want academics to be operating. But if they don’t have the safety and the physiological needs levels met financially and again through other support systems, how, how can they be expected to be in that actual self actualization level, which is ostensibly what they’re there to do. Um, so it doesn’t really make a lot of sense, but as we have been talking about, there are so many different inputs to this system. That have to be, um, considered in the history of it. And gosh, well, I’ve enjoyed this conversation so much, Michael. Um, is there anything else that you would like to add at this point on How universities or state level or government or federal level governments could be better supporting their graduate students.

44:31 Michael: I think that we have really covered, I think the wide range right of inputs. I really appreciate the conversation. I really appreciate your perspective and, uh, I think that you’re doing such great work. I think I’m trying to highlight how diverse right? This is the experience of, uh, financial life can be at the graduate student level. And, uh, Yeah, it’s just not really a story. I think that you think of immediately when you think of financial insecurity, but, of course, as we know, it’s, it’s, it’s a very, very pervasive feeling that a lot of us experience the graduate student level and it really resonates with me about how important the work that happens in universities is. Right? And I don’t even think that you really need to be overly romantic about it to think about the value those institutions have to public life and graduate students are a critical part of that. Uh, so I really have enjoyed this conversation and, uh, I don’t think I have anything additional to add.

Best Financial Advice for Another Early-Career PhD

45:24 Emily: Okay. Then we’ll just end with the final question that I ask all of my guests, which is what is your best financial advice for another early career PhD? We really haven’t gone in to that personal finance realm too much at all during this interview. So this is kind of your opportunity to enter that individual level and say what’s worked for you or what you think would work for other people at the graduate student level.

45:44 Michael: Yeah. I appreciate the time to sort of reflect, I think, on that, uh, on that question. And a lot of it is sort of connected to these key key elements that we’ve talked about so far in the conversation. I know that for me, 1 thing I didn’t think about enough about before I started was availability of funding, right? For my own research. And even looking at the availability of that funding, uh, what was it going to take to actually try to be competitive for it because of how limited it is, um, because it’s 1 of the key things, right? That we just were talking about this, but, like, relieving that pressure, um, of, uh, you needing to focus on the teaching and the work in order to make a living, right? To earn that stipend to sort of survive, um, the space then in your life gets shrunk, right? To focus on your own research, which it’s not even just about, like, you know, the, the personal fulfillment and self actualization as you were talking about, but it’s also about how long are you going to take to finish the degree? Right? I mean, I’m a graduate student. I’ll be candid about it. I mean, I’m, you know, in my 9th year, that’s definitely over the average sort of time to degree. A lot of that has to do with Trying to sort out sort of my own financial, you know, and my family’s financial situation at an individual level. I’m certainly not the only graduate student That’s tried to. To balance those 2 things with a limited availability of a funding to support me finishing my degree. So that’s something really just thinking about what types of opportunities are available to you and where you can get the best support for your own sort of research career if you have the choice, right? If you have the programs to choose from, if you have different types of opportunities available to you, just really thinking about that. And it’s hard when you’re just starting. Because you’re about classes, you’re thinking about where you’re gonna live. You’re thinking about, uh, you know, how you’re gonna read and pass your exams. It’s a lot of pressure, but taking some time to think about that earlier rather than later I think is really important. And then the last thing I’ll just end with to think resonates with the conversation we’ve had as a whole is trying to think about the various, you know, changes that are gonna happen to you in your life during that period of time. And how you can maybe try to anticipate some of them think about preparing, you know, for them, or just being mindful of how that might impact your financial situation. Uh, you know, changes in your in your family, right? Having, you know, a child, maybe experiencing a situation where you have to prioritize the care of a parent, um, these types of situations that can really come out of nowhere in life, you know, um, and I can say that Graduate students, I think are particularly vulnerable to these changes because the image of the graduate student is like a young person. That’s able to sort of stay up all night and eat ramen and read books. But that’s not every graduate students reality. Um, the onus is on you individually a lot of times, unfortunately, to really think about how to navigate that. And I know that for me, I think I wish I would have spent a little bit more time thinking about how my life was going to change over that period of time and how I could be better prepared for it.

48:51 Emily: That’s something I’ve definitely heard from other interviewees, um, something I also experienced to an extent while I was a graduate student. I mean, a PhD program is long. I took six years, you’re on nine now. Um, you can move through different life stages, as you said, during that period of time. And as we’ve been talking about, The economy can change underneath you. You can have a pandemic. If you started graduate school in 2018, 2019, you’re still in graduate school. Um, and so absolutely like as, as thinking of it as an individual decision, where am I going to go? How well are they going to support me there? You have to build in that. You’re going to need more support than you do at the moment, right? You can’t necessarily assume for five years, you’re going to be eating ramen and staying up all night, right? Your life is going to change and you, you have to think about those shocks. Um, but unfortunately Stipends being what they are, it’s very difficult to say, okay, I’m, I’m definitely going to go to the program that fits me best, the research interests, as well as supporting me above and beyond what my current needs and wants are, but factoring that into account, very, very, very difficult, but really, really good food for thought for anybody who is in that perspective stage.
49:56 Michael: Yeah, absolutely. Couldn’t agree more.

49:59 Emily: All right, Michael. Thank you so much for coming on the podcast. This has been a delight and I really appreciate you.

50:06 Michael: Thanks so much again, Emily. I really had a great time. Uh, really, really loved, I think, just being given the time to sort of reflect and think. about my own sort of financial life as a graduate student. And, uh, you’re doing such great work. And so I really love the opportunity to come on the podcast.

50:21 Emily: Thank you so much.

Outtro

50:28 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

Does Your University Use Section 117(d)? Please Take Our Survey!

November 15, 2017 by Emily

There have been more developments with the GOP tax plan (the Tax Cuts and Jobs Act) with respect to graduate students’ tuition benefits.

Last week, I gave my interpretation of how the House bill selectively eliminates one form of tuition benefit (tuition reductions) while leaving in place another (tuition scholarships).

Since my writing, an amendment was proposed to maintain the tuition benefits as they currently are, but it was defeated. The House bill is expected to be voted on tomorrow (Thursday, November 16, 2017).

You can find more information and action steps on the NAGPS website.

The Senate version of the tax bill has also been released in the last week, and it apparently does not include the same changes to graduate student tuition benefits that was in the House bill.

If both bills pass as currently written, they will go to a conference committee to create a compromise between the two versions. Then, the agreed-upon version will go back to the House and Senate to be voted upon. It is still important to voice your opinion about this particular provision of the bill to both your representatives and senators so that either the conference committee does not include changes to the tuition benefit in the final version of the bill or your Congresspeople vote against the bill if it does.

In the meantime, I am collaborating with two current graduate students, Andrew McCubbin and David Dixon, to figure out which universities are using section 117(a-b) vs. 117(d) for their tuition benefits. My purpose is not to discourage anyone from taking action opposing the TCJA but rather to help students with their personal financial planning and advocacy at the state, university, and department level, should the TCJA pass with the tuition benefit cut in place.

We have a survey up right now; would you please fill it out to the best of your ability and share it with your peers? In the next few days, we’ll start sharing our determinations from the survey on this results page. Also, feel free to comment on this post or email me if you have relevant information but don’t want to fill out the survey!

Which Graduate Students Will Lose Tuition Benefits Under the Proposed House Tax Bill?

November 8, 2017 by Emily

Update: Please fill out this survey on how your university handles your tuition benefit. I and some colleagues are trying to determine which universities use the method slated for elimination in the House bill.

The House GOP released their proposed tax bill (The Tax Cuts and Jobs Act) last week. Over the last several days numerous media outlets have covered the effect the bill would have on graduate students who receive “tuition waivers,” and graduate students have started organizing responses. Students at Carnegie Mellon, for example, calculated how much more tax students in various schools would have to pay if they lost their tuition tax benefits.

Here are articles I read that are most focused on the bill’s effect on graduate students:

lego tuition waiver tax — An excellent illustration of the possible impact of the Tax Cuts and Jobs Act on some graduate students from Lego Grad Student.

When I first started reading about this issue, I got the impression that under the bill all graduate students would see a large increase in their tax burden based on the reversal of their previously untaxed tuition benefits. The strongly worded headlines above certainly imply that graduate students would see such an increase in tax that continuing their educations would be impossible.

However, after spending many hours reading the current tax code, Publication 970, the proposed bill, university websites, news articles, and social media, I think that there is some confused information and hyperbole in the early reports, or at least what the articles are saying is being taken out of context by scared graduate students. However, I haven’t fully figured out what the implications of the new bill are, and I have several questions that are still outstanding. This post details my current thoughts on the issue. My intention is to calm some of the extreme fear I’m observing (in those who do not need to be so fearful), while still imploring you to voice your opposition to the proposed changes to tuition benefits and other effects on higher education funding.

To be clear, I don’t wish to see the net (after-tax) income of any graduate students drop as a result of tax reform. I believe all graduate students who have assistantships or who receive fellowships should be paid at bare minimum a living wage. Honestly, that’s a pretty low bar that not all universities currently meet. If a new tax bill is passed that increases the tax burden on graduate students, the universities should take steps to ensure that current graduate students’ net pay does not decrease. Otherwise, they do risk losing students they have already invested in or putting the students who remain in such a precarious financial position that they are distracted from their research.

But before you panic about your own personal finances, I think you should look carefully at how exactly you are paid. Not all graduate students will be negatively affected by this direct changes made by this bill (should it pass); I think the effects are going to be less widespread and less extreme than what the current coverage and conversations imply.

However, I do think you should lobby your representatives to maintain (more of) the current education benefits. (You just may not be able to use yourself as an example.) This is a moment in which graduate students and academics can band together to advocate for ourselves and academic research in general, whether or not we will be affected in our individual finances. The end of this post lists a few action steps. If the bill does pass, there will be more advocacy to be accomplished within your state and at your university to mitigate the bill’s effect on your and your classmates’ bottom lines.

A disclaimer: I’m using a lot of secondary source information for this post. I did read sections of the current tax code and the proposed bill, but as I’m not a policy wonk or lawyer I freely admit that they are difficult for me to parse. If you find any mistakes, wrong conclusions, or omissions, please let me know so I can update the post. Accuracy is very important to me.

What Tuition Benefits Do Graduate Students Currently Receive?

We have to get technical for a bit here because the devil is in the details. I’ve seen students and articles using the terms “tuition waiver” and “tuition remission,” which do not appear in the proposed bill, Publication 970, or (as far as I’ve read) in the current tax code. So I’m going to avoid drawing conclusions from the common terms that are used in academia in favor of figuring out what is actually in the current tax code and bill.

There are three broad tuition benefits that I’ve known graduate students to use:

tax-free scholarships, fellowships, and tuition reductions (the most common)
the Lifetime Learning Credit
the Tuition and Fees Deduction

Basically, if you have any qualified education expenses such as tuition and required fees (the precise definition is not consistent), you can get some kind of tax break.

The proposed tax bill eliminates the Lifetime Learning Credit and the Tuition and Fees Deduction in favor of an expanded American Opportunities Credit (which can only be used in the first five calendar years of post-secondary education and therefore pretty much doesn’t apply to graduate students). This change will increase the tax burden on the students who previously used the Lifetime Learning Credit or Tuition and Fees Deduction, but that hasn’t been the main concern I’ve seen expressed by graduate students in the media.

The big kahuna here are the tax-free scholarships, fellowships, and tuition reductions. There are no monetary limits on these benefits like there are on the Lifetime Learning Credit and Tuition and Fees Deduction. Currently, any scholarship or fellowship that goes toward paying your tuition or qualified fees is not taxed. Also not taxed is any “tuition reduction” you receive. A tuition reduction is the difference between the sticker price tuition and the tuition you are charged.

Scholarships, fellowships, and tuition reductions are all lumped together in Chapter 1 of Publication 970 and Section 117 of the tax code, so I’ve never paid much mind to which is which exactly since they were all tax-free. But the proposed tax bill specifically targets one benefit and not the other.

Which Tuition Benefits May Be Lost and Which May Be Maintained?

The benefits are delineated in Section 117 of the tax code as qualified scholarships (117(a-b)) vs. qualified tuition reductions (117(d)). The tax bill proposes “striking subsection (d) of section 117” (p. 96), presumably leaving intact the other sections.

117(a-b): Gross income does not include any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii). The term “qualified scholarship” means any amount received by an individual as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses.

117(d): Gross income shall not include any qualified tuition reduction. For purposes of this subsection, the term “qualified tuition reduction” means the amount of any reduction in tuition provided to an employee of an organization described in section 170(b)(1)(A)(ii) for the education (below the graduate level) at such organization… In the case of the education of an individual who is a graduate student at an educational organization described in section 170(b)(1)(A)(ii) and who is engaged in teaching or research activities for such organization, [the above] paragraph shall be applied as if it did not contain the phrase “(below the graduate level)”.

How Can You Tell What Type of Tuition Benefit You Receive?

Section 117(d) explicitly applies only to university employees, which in the case of graduate students means teaching or research assistants. So if you are currently not a student-employee, i.e., you do not receive a W-2 at tax time, your tuition benefit should not change (which further argues for the superiority of fellowship funding over assistantship funding). (An analysis from a Berkeley student concurs this point.) However, I think it’s pretty unusual for a PhD student to complete her degree supported only by fellowships and training grants; most students serve as TAs or RAs for at least a few (if not all) of their semesters.

For student-employees, the question becomes: How do you know if your tuition and fees are paid by a qualified scholarship or a qualified tuition reduction? I do not have a good answer, and I’m hoping a reader can provide one. I don’t know that there is a different reporting mechanism, for example, for qualified scholarships vs. tuition reductions. (The 1098-T, if one is issued, should reflect the required tuition and fees charged to the students and the scholarships applied, but I don’t know if or how a tuition reduction would be reflected in that document. A qualified tuition reduction would not appear on a W-2.)

The best suggestions I can make at this point to figure this out for your situation are:

Re-read your offer letter and any employment contract you have with your university for the keywords “tuition reduction” vs. “scholarship,”
Check your Bursar/Cashier’s/Financial Aid account for the term “reduction,” and
Ask administrators at your university whether you receive a tuition reduction (e.g., the Bursar/Cashier’s office), pressing them to consult the university attorneys if they can’t point you to an answer.

How Common Is the Use of Section 117(d) for Graduate Students on Stipends?

One of the popular articles circulating by Vox pulled a figure from an infographic sheet the College and University Professional Association for Human Resources. (CUPA-HA also created this summary bulletin on Section 117, which makes it clear that section 117(d) is used by many types of university employees beyond TAs and RAs). In turn, the infographic is based on the 2011-12 National Postsecondary Student Aid Study.

vox 117d impact — An infographic from Vox on the number of students taking advantage of the tuition tax benefit in section 117(d).

The relevant number that the Vox article and CUPA-HA cite is that 145,000 graduate students benefit from section 117(d). (I was very curious about how they determined this number as it seems so wonky and specific to help with the unanswered question above, but the version of the 2011-12 National Postsecondary Student Aid Study that I could access did not contain this data. So I would like to dive further into those numbers, but I’m stuck for now.)

Taking the 145,000 students at face value (50% of whom earn more than $50,000/year, so not exactly traditional graduate students who would be unable to continue their studies due to an increased tax bill), what fraction of the total graduate student population is that?

I couldn’t find the answer directly, but the recent NSF survey of earned doctorates cites 54,070 doctorates awarded in 2014. Approximately 50% of PhD students never complete their degrees, so I would peg the current number of doctoral students in the US between 250,000 and 500,000. The 145,000 figure probably also includes master’s students, making the relevant pool of graduate students in the US even larger.

145,000 students using section 117(d) is certainly a large fraction of that total, but definitely not everybody as was my first impression. (Keep in mind, though, that an individual student may use section 117(d) during part of her time in graduate school, so the number using it at any given time is less than the total number who use it at any point.)

As far as how the proposed legislation will affect students at individual universities goes, I have two data points so far (please let me know if you’ve received a definitive answer from your university!):

The Dean of the Graduate School at Cornell released a statement regarding their policies. It 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.

I graduated from Duke University three years ago, and my understanding was that my tuition and fees were paid by scholarship. In my Bursar account, for example, I would see a tuition charge posted and then a payment posted on my behalf. I assume that payment was a scholarship, and I don’t know how a tuition reduction would have appeared. My recollection was (I think) confirmed by this page that discusses how graduate students are supported: “Full or partial scholarships: Cover tuition and fee expenses.” Tuition reductions are not mentioned. So I think that Duke students, like Cornell students, also do not depend on section 117(d) for their tuition tax benefit.

A Tentative Guess as to the Impact of the Proposed Bill

Here is my intuition on the matter, and I’m curious if it bears out or not. I formed it based on the scantest impressions and it involves far too much extrapolation.

I think perhaps tuition reductions are used mostly by public institutions, whereas qualified scholarships more so by private institutions. Therefore, eliminating the non-taxable status of tuition reductions may disproportionately affect public school students.

However, the large numbers I’ve seen in the media of the “devastating” effect of the tax bill on graduate students are based on tuition charged at private universities and by public universities for out-of-state students. (State policies regarding residency status for the purpose of in-state tuition vary. In some states, students are eligible for in-state residency after the first year. In others, such as Georgia, out-of-state students maintain their status for the duration of their degree.) Public, in-state students might see their taxes increase by hundreds of dollars or a thousand dollars, not the multiple thousands or $10,000+ I’ve seen quoted (except perhaps in the year when they are considered out-of-state students), which is if the full tuition and fees at some private universities were taxed at 12 or (partially) 25%.

I think that if tuition reductions are being used by private universities, they will have more wiggle room to pivot to either compensate their students differently or to pay them more. Well-funded departments and universities may also be able to increase their students’ pay to make up for the additional tax due (perhaps a one-time grant in the first year for out-of-state public university students). Therefore, I hope that the negative effects of the bill will be smaller and more limited in scope than currently anticipated.

Steps You Can Take to Advocate for Higher Education

All that notwithstanding, this is the time for advocacy. I fear that if the proposed tax bill passes as written, the additional tax burden will fall largely upon the students who are least financially secure, namely students in underfunded departments at public universities (earning, for example, less than $20,000/year). A $1,000 increase in their tax bill could easily push them into (further) credit card or student loan debt because their finances are so precarious to begin with. Even if your university does not rely on section 117(d) or you have a fellowship, please stand up for your fellow PhD students who are at risk.

The NAGPS Call Congress Day is TODAY, November 8. You can find all the details about action steps on their Facebook event and website. You can still use their talking points as guidance after November 8.
If you are represented by a union, participate in their lobbying efforts, or consult them on how to organize your own.
Talk with your peers about advocacy steps you can take as a group at the national level and, if this provision of the bill passes, at the state, university, and department levels.
Tell your family members, neighbors, college friends, mentors, etc. about this issue and ask them to advocate for PhD students as well.

In all of this, if you are currently taking advantage of a tuition reduction I encourage you to use your personal numbers (by what absolute amount and percentage your tax bill would increase) like this student did. These numbers are shocking and powerful.

Do you benefit from a tuition reduction or is your tuition paid by scholarship (or both)? Do you expect your tax burden to increase or decrease if the Tax Cuts and Jobs Act passes as written and by how much? How are you advocating for section 117(d) to remain in the tax code?