In this episode, Emily interviews Jason Anderson, a 5th-year PhD student in aeronautics and astronautics at Stanford University. Thanks to his work experience prior to grad school, Jason developed an unusual ability to read legalese and view every “no” as a starting point for negotiation. Both as a part of the Graduate Student Council and independently, he has advocated for changes to the benefits Stanford offers to its graduate students, particularly with respect to retirement accounts, health care options, transit, and income tax on fellowships. Emily and Jason have a lively conversation regarding the history and current status of these benefits at Stanford and at other universities, culminating in Jason’s advice to other grad student advocates and personal financial advice for all graduate students.
Links mentioned in the Episode
- How to Not Hate Your Fellowship During Tax Season
- Emily’s E-mail Address
- Host a PF for PhDs Tax Seminar at Your Institution
- Student Exception to FICA Tax, Treasury Decision 9167 (Example 8 on page 24)
- Host a PF for PhDs Seminar at Your Institution
- PF for PhDs S14E2: How This Grad Student Fellow Resolved an Expensive Tax Bill in His Favor
- PF for PhDs Subscribe to Mailing List
- PF for PhDs Podcast Hub
- Jason’s Website
- Jason’s LinkedIn
00:00 Jason A: So they made some changes this year that I, hopefully will alleviate the problem. But, you know, this problem could have been alleviated years ago if they were listening to the students.
00:16 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. 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.
00:47 Emily: This is Season 16, Episode 3, and today my guest is Jason Anderson, a 5th-year PhD student in aeronautics and astronautics at Stanford University. Thanks to his work experience prior to grad school, Jason developed an unusual ability to read legalese and view every “no” as a starting point for negotiation. Both as a part of the Graduate Student Council and independently, he has advocated for changes to the benefits Stanford offers to its graduate students, particularly with respect to retirement accounts, health care options, transit, and income tax on fellowships. Jason and I have a lively conversation regarding the history and current status of these benefits at Stanford and at other universities, culminating in Jason’s advice to other grad student advocates and personal financial advice for all graduate students. You’ll hear in the second half of this interview that Jason and I dive into some of the issues regarding fellowship income and taxes, which as you know is one of my favorite subjects. By happenstance, we recorded this interview in late September 2023, and in early October, about a week before this episode publishes, I’m scheduled to give my new webinar, How to Not Hate Your Fellowship During Tax Season, for Stanford. I’m crossing my fingers that it really helps alleviate the stress of the grad students and postdocs and is received well, like it has been the other times I’ve given it.
02:18 Emily: If you’d like to bring that webinar in particular to your institution this fall or any of my pre-recorded tax workshops now or during tax season, just reach out! I would be happy to chat with you and give you more information that you can take to your graduate school or postdoc office to ask for this kind of support. You can reach me at emily@PFforPhDs.com or read more about these offerings at PFforPhDs.com/tax-workshops/. You can find the show notes for this episode at PFforPhDs.com/s16e3/. Without further ado, here’s my interview with Jason Anderson.
Will You Please Introduce Yourself Further?
03:06 Emily: I’m so excited to have joining me on the podcast today, Jason Anderson. He is a fifth year Ph.D. student in Aeronautics and Astronautics at Stanford University. And Jason was actually connected to me by some of my contacts at Stanford who are hosting me for a webinar at the time of this recording. It’s coming up in a couple of weeks, and they told me that Jason is the person to talk to about some of the financial policy questions and concerns that the students may have. So that’s kind of going to be our topic for the podcast today. The advocacy work and the areas that Jason sees room for improvement in in terms of financial policies at Stanford and possibly at your institution as well. So, Jason, thank you so much for agreeing to come on the podcast. It’s a pleasure to talk with you here. And will you please tell us a little bit more about yourself?
03:49 Jason A: Sure thing. Thanks, Emily. It’s a pleasure to be here. And I’m really glad that I’m going to be able to share this knowledge. I’m really excited to help graduate students get get every everything they deserve. So as you said, I’m a fifth year aeronautics and astronautics student. My research pertains to augmenting GPS signals with cryptography in a way that is efficient and manageable. You know, GPS signals are have been around for a while, and cryptography requires a lot of data. So that’s what my research is about. And my hobbies would definitely be emailing administrators to get them to do things that the grad students need, you know, blow off steam. You know, that does come from some of my background working for and the legal field for a while writing those nice, crisp emails.
Connection Between Legal Experience and Advocacy
04:47 Emily: Let’s talk more about that experience that you had prior to starting graduate school. Yeah. So you were working in the legal field to some degree. Tell us about that experience.
04:59 Jason A: Yeah. So before Stanford, I went to UC Berkeley, go bears, and I needed to make a lot of money for my out of state education to be able to afford that. So, you know, I was a freshman engineer and applying to all these jobs to try and get myself an internship. So I, you know, I’d have have to have that income. You know, one of the checkboxes on one of those large websites was legal intern. And so the only job that returned to 19 year old Jason was that legal job. So it turned out to be a really interesting experience for me. I worked I worked there for between three or four years, actually, as a as a telecommute or working, you know, lots and lots and lots of hours and, you know, hours functioned as an executive assistant, which, you know, scheduling meetings, phone calls. But also my mentor allowed me to learn a lot about legal things. So I spent a lot of time reading agreements and reading laws, trying to trying to, I don’t know. So there’s this, you know, not to be cliche, but there’s this Sun Tzu person who wrote The Art of War. And, you know, his his main mantra was the art, the supreme art of war is to wage war without fighting. And so that’s like a big that was a big context for me. And the law of trying to use and take pieces together, strategy of trying to fix issues, using that. And then so that sort of prepared to me for a lot of the advocacy work today. And then after that experience, I worked at a different defense contractor and then came to Stanford. And so I have served as the in the student government here. I had no interest in student government in my undergrad. And it was not until I needed things that I became interested, like with regards to health care, retirement transit, a bunch of other benefits that I wanted I didn’t have. So I came to that quest to get them. And then, you know, so Stanford just voted to unionize and I am involved with that. So our union, as you know, is is undertaking a lot of these issues to help graduate students afford living. So here at Stanford, there are a lot of issues with affordability because, you know, Stanford is a very, very high cost area to live. So, you know, we have a lot of people going to the food pantry are especially partners with children, you name it. There’s a lot of work that needs to be done to make sure that that Stanford is affordable. So and that’s that’s part of what I’ve been working on in my as my hobby project, I suppose pretty serious hobby. But, you know, I still work full time as a graduate student.
08:07 Emily: Well, thank you so much for telling us about that experience. And we’ll get into talking about these specific benefits in a moment. But I just wondered if you could really explicitly make this connection between having this experience, being able to read legal documents and grappling with that kind of language and how you’ve been able to employ that past experience and that skill in asking for finding, advocating for the things that you and your peers need.
08:34 Jason A: Well, so I say that the first sort of thing that comes to mind is like the grit to even though when somebody says no to you, it’s not actually a no. So like, for instance, one of the items we’re going to talk about is retirement and when we get to there, we’ll talk about someone gave you a legal opinion that turned out to be false. And so, you know, when someone says says no to me, it’s it’s just not no. There’s still ways there’s still a way that you can you can talk. There’s a way to position yourself to respond back in such a way. Because, you know, Stanford or pretty much any school administrator is counting on you going away like. Right. So students are there in and out. And if you can just persist just a little bit, you know, you’ll be 100 times more successful. Ah, let’s see there are a lot of student government things that come to mind, like, you know, I got food trucks to come on to campus. That was a that was quite the ordeal. You know, for someone said, well, we can’t do this because these four different department departments need to approve, you know, like the infrastructure and then, you know, like, you know, parking, transit and then fire and then police and then, you know, these other things. And anyway, so the persistence that comes from being able to respond back, you know, when somebody says no, but also to read the documents because someone says no to me and I’m like, well, can you point to me the written rule of why somebody say, no, no, they they might not be able to point to a written rule. What they want you to do is they’re just so used to saying, Oh, I can just say no to this person and they won’t question. And then, you know, there are a couple of times where somebody says no to me. I ask them where in the rules it says that. And then they’re like, Oh, well, we reconsidered. So yeah. So being able to essentially mean where can I appeal. Right. If you know I do appeal, well then yeah. So
10:41 Emily: Yeah, it’s kind of appealing or negotiating and also like asking for your source. Like if you’re telling me there is a rule, okay, I’d like to take a look at it myself. Would you send me the link? Would you send me the document? I found the same thing that people have an impression of what rules are, and that’s actually not literally how it’s written or they’ve misinterpreted maybe what was written. And there’s another way to interpret it. Yeah.
11:05 Jason A: Everything’s sort of like a game of chicken when you’re trying to spar with someone. So their game with chicken is all the same. I just said no, they’ll go away. My game of chicken is I need the rule and they’re going to have to do the work to find the rule. And then they’re going to they’re going to realize, I don’t want to do that anymore. And it’s easier just to let me get what I want. So anyway.
11:26 Emily: I like what you said, though, about, like, oftentimes administrators. I mean, I don’t like to ascribe ill will to people. That’s not very, very, very obvious that that’s what’s going on. But a lot of times people are just overloaded and it’s easier to say no or just dismiss you or whatever, because it would create more work for them. But if it’s really important to you and important to your peers, then you should both try to come to a solution together. That’s mutually appealing.
11:53 Jason A: It helps I don’t take things personally on these types of issues. You know, I am I’m not someone who takes things personally, so it’s cold water on a duck’s back to me. But I can still write that emails to respond back. But yeah,
12:06 Emily: All right. Well, let’s get into these enticing areas of negotiation and pushback that we talked about before. So I want to hear about your kind of personal experiences working with or against or whatever the Stanford administration in these these four areas. Okay. We’re going to talk about retirement, going to talk about health care, transit and then income tax withholding, estimated tax. So let’s start up at the top with retirement. Can you give me a summary of what’s going on right now and what you have tried to ask for, what you’ve tried to advocate for?
12:39 Jason A: Well, so I have the privilege of having some extra income. You know, not everybody at Stanford has that. But one of my goals is to save 15% of my income. If you start early, this is what Fidelity says it’s only 15%. But a Roth IRA isn’t sufficient for that. And, you know, I think retirement is more like a public health issue. So in that you should have it deducted and not think about it, because if it’s not there, then people aren’t going to do it. So that’s why I think the employer deduction is really important.
13:12 Emily: That’s why people are moving to opt in system or rather opt out systems rather than opt in systems that are normal type of workplace.
13:19 Jason A: Yes. And then also my first year, I needed to borrow for my retirement from my company because I was in a cashflow pinch for about three months. And I was able to do that because I was still employed. I was simultaneously employed. If I didn’t if I weren’t simultaneously employed and I would have you know, you have all these graduate students who are super cash for. But you know something? A lot of them work between undergrad and graduate. So, you know, if Stanford provided this retirement benefit, then, you know, a lot of things happen. You know, you can do that public health savings, you can borrow from it. And, you know, and the benefit is very cheap. So, for instance, another company I work for, I know that the price per person participant is about $4 per month. And that’s actually a very expensive plan. So what my my knowledge is, is that I know this is very cheap and it’s extremely beneficial. I mean, it’s essentially helping grad students avoid taxes from the federal government. Right. Or avoiding shark loans.
14:21 Emily: Absolutely. And furthermore, I mean, Stanford and every university already operates a 403(b) plan at a minimum. And that’s the plan we’re talking about here for the listener. We’re talking about expanding access to the 403(b) plan that the university already has for its employees and faculty and everybody to the graduate students who are also employees. Correct?
14:42 Jason A: Yeah. Yeah, that’s exactly right. 401- 403(b) for for my institution because I guess we’re we’re exempt from income tax. But yeah.
14:53 Emily: Yeah. And so you’re saying, yeah, just what you said. Like if a student came in, let’s say they had a 401K or a 403B at a prior employer and they were able to roll it into Stanford’s 403B plan and they’re currently an employee at Stanford then like you did, they would be able to take a loan or while withdrawal could happen either way, but a loan against the four oh three B and then be able to pay it back gradually over time to alleviate the cash flow crisis. As you said, that is so common, especially the start of graduate school, very, very expensive transition. Generally speaking, they’re not helping you at all or very much so. Absolutely. That makes sense. And as you said, to continue the, I think it’s partially like a mindset thing, like because four oh three B’s are not typically offered to graduate students. It’s like not it’s not on their mind. It’s like an out of sight, out of mind thing about saving for retirement. And as you said, if possible, saving something like, you know, a few percentage is fine, but up to 15% would be an amazing goal to be able to accomplish during graduate school. And without the employer support on that, it’s easy to put it on the back burner. It takes a lot more initiative to open up an IRA, you know, separately from what’s going on at work.
15:59 Jason A: Yeah. The only reason why I was on my mind is because while I’m out of Berkeley does this. All right? Right. And so, you know, there are institutions out there that do do this. So
16:09 Emily: Okay. And so what communications did you have with the administration regarding the 403B?
16:14 Jason A: So, you know, student government is its own own thing. And, you know, so on the docket list of priorities, retirement is at the bottom one. Okay, because there’s far more important issues. Okay. But it also costs the employer nothing. Postdocs already have this. Okay. So this is like at the bottom of the list. You know, we’re hoping that they’ll give us the crumbs or whatever. Right. So when I pursued this avenue of advocacy several years ago and the response was, well, so if we give you this plan, then you’ll lose your FICA tax exemption. So just for your readers, graduate students and students in general do not have to pay FICA taxes and which is seven and a half percent off if your paycheck for Social Security and Medicare. So it’s like, Oh, wow, Well, we wouldn’t want to give up seven and a half percent of our paycheck. So I can I can have the option of putting 1% away. Right. Well, so you know that that’s where the legal experience comes in. I’m like, well, they said no for a very good reason to me. And so I go through and read the IRS law and I look up, I see I pull up the document just in case, you know, document number 9167, And on page 24, the IRS provides a comically helpful example that explicitly explains that graduate students can participate in the form of 403B plan and not be FICA exempt. And this is like so you know that tenacity I’m talking about. Well, I read that document from page one through page 30, right? It takes a lot of gumption, I think is to read through really boring topics like this. And it turned out to be helpful. So then as a student government, I got some pro-bono advice from a retirement lawyer. After I wrote my own opinion, I had the lawyer look over it and then I sent back this demand letter that says What you said is not true. And no, and we should be able to get this. And then so then after that, they’re like, Oh, well, nobody would use it. And, you know, the survey data that I have by most, my constituents shows that that’s not the case. People would in fact use it. But, you know, you know, I’m hoping that different organization, hopefully our union will be able to win that. But, you know, there’s a lot of other priorities, too.
18:30 Emily: Okay. So that’s the current status of you think you’re in you’re in the right here, at least their excuse number one was not a valid excuse. I haven’t looked at this myself. It’s very interesting to me. I’ll have to check this out after the end of the podcast interview. And that’s where it stands right now. You’ve knocked down their argument, but no further progress.
18:49 Jason A: Yeah. I mean, I think food insecurity and affordable housing and health care are much more important issues. But, you know, two years ago when I was working on this, I was, you know, you know, Thursday evening, I’m like, we’re doing my research and I’m like, oh, thank you, IRS they like, I’ll give you an example. Like, student J, is this No, they are exempt from FICA, which is I think it was kind of comical, but yeah, they didn’t do their homework or they were they’re lying to me to give me a go away. I mean, who knows? You know, I want to give them the benefit of the doubt, but at the same time I think it’s clear and Berkeley and other universities are able to do it.
19:31 Emily: Mm hmm. Yeah, I mean, I agree in terms of, like, basic needs, you know, paying people enough that they don’t have to access food pantries and be housing insecure and all these things very important. But there’s also like the optics on, hey, like let’s treat grad students like they’re real employees and give them real benefits that other people have in other places. It’s quite standard. So there’s that aspect of it as well. But thank you for filling us in about that, because I am quite sure that many, many grad students around the country would also like to use their universities for 403Bs and you know, maybe they can get a little budge on this like you have so far not been able to, but good efforts to move on to the second topic of health, health care, health insurance.
Health Insurance Negotiations
20:13 Jason A: Yeah. So Stanford you know your readers can Google Stanford Bill on affordability and I, I wrote with my colleagues in the graduate Student Council 10 page actually explaining why Stanford is not very affordable. But one of those things is health care. We have the most expensive health care plan that I can find. And then one of the things that is expensive about it is that Stanford students, rain or shine, I have to pay $1,000 per year for their primary health care. I do think that other universities have similar fees, but they’re covered by their tuition. So I do have family who are health care administrators, and I’ve participated in health care advisory boards. So it’s typical for an employee, an employer, a large organization to have advisors on benefits. Stanford faculty have this, Berkeley students have this. We’re still working on Stanford students, but essentially the students come together and they advise on what benefits should they should they have like, oh, graduate students need wisdom teeth surgery because we’re young or prescription eyeglasses would be nice at Stanford they’re not covered, you know, things like that. And it doesn’t necessarily have to be cost positive or neutral. The point is, is that people should have a say because they pay into the plan. And the administrators, I think, don’t have the best knowledge. The students have the best knowledge. So that’s something I’ve been fighting for for more than two years. I mean, retirement is probably the interesting thing about the taxes and whatever. But, you know, you know, you know, we’re that’s the thing I’ve been working on for a long time. So, like, for instance, Stanford recently changed and they passed just a smidge on allowing student advice on that topic. But they retracted actually. So we’re we’re still fighting for back. But essentially, you know, the advice that I was able to talk about is, you know, students want an app to use their health care because last year, in order to get claims processed, you had to mail in the claims and pulling your hair out like, I don’t know, maybe your readers have an app for their health care, right? So I had to help. I had an app for my parents when I was on my parents insurance. And then and then. Furthermore, the plan is a very high level plan which sort of prices out. Most everybody, only people on the plan have it subsidized. So, you know, the professional students are really hurting right now because they might be over the age of 26 and their only health care options are Obamacare or Medi-Cal or this plan that Stanford offers. So I’m really, that’s something that we’ve been asking for. And, you know, I think we’re going to get it with the with the union. But, you know, I wish that Stanford was as good as Berkeley, so I’m wearing my Stanford shirt. But, you know, Berkeley has been doing this for years. I wish Stanford would catch up on this on this regard.
23:11 Emily: Well, it’s good to have a nearby, you know, peer type institution to compare to and say what are the best practices that we can take from over there and share back and forth? I think in our prior conversation, you mentioned to me that the annual premium, if I remember correctly, for like a like a single person enrolled on the health insurance plan was like $7,000, is that right?
23:33 Jason A: Yeah. So the aggregate expenses are a 68 plus 1000. So I think about 77 to 7800. And if you have a student partner with a child, the premiums are 12 grand a year. At least 12 grand last year might be 13 this year. So and so to me. So, you know, there’s been issues with the plan because it’s in low participants and they’re apparently in a spiral out of control. And, you know, you wonder why it’s so, so, so expensive that nobody can afford to use it. So, yeah, to me, that price is like, please go away. That’s what the premium says, Please go away. So and then especially to our Stanford International students who bring partners and children and they have visa restrictions preventing them from getting other jobs, you know, those are the people who are at the food pantry every month because they are doing their best in such an unconscionable circumstances.
24:40 Emily: I can confirm when you said that number to me in our previous call that really raised a red flag for me, that that was very high compared to what I hear at other institutions. I want to say. I mean, I was in grad school some number of years ago, but I want to say it was like 2 to $3000 for the year for the premium for one person. So, yeah, a very different price level between those two. So that’s interesting that you. Okay, so you’re saying there it’s an under enrolled plan because the price is so high, which causes the price to go higher. So it’s like in sort of a death spiral. But the competition, let’s say, okay, if you’re a student, you can enroll in this plan. If you’re still under age 26, maybe you can enroll in your parent’s plan or maybe have a spouse. You know, there’s other places people can go, but then that last resort is like the ACA exchange rate versus the Stanford plan.
25:26 Jason A: Yeah, what’s sad about that is you lose a bunch of tax subsidies, right, because that’s why your employer pays for your health care. You know, and there are some tax subsidies. You know, I haven’t done my research into it, but I mean, it’s a very it’s it’s really structured that your employer should pay for this. And also the plan here is for the facilities nearby. If you go ACA, you know, who knows where you where you’re going to be and especially those international students who are coming into this health care system and don’t know what is going on. But yeah, yeah. And part of the reason why the plan is so expensive is because all all Stanford, pretty much all the health care, you have to go to the hospital. And Stanford also is a nice hospital, but it’s impacted. So like I tried to get an appointment nine month waiting time for myself, you know, So they made some changes this year that I hopefully will alleviate the problem. But, you know, this problem could have been alleviated years ago if if they’re listening to the students. So yeah. And also say a lot of this is my opinion. So take that with every grain of salt.
26:37 Emily: Absolutely. Okay. So the idea here is to get a committee, a student group that advises on the health care plan. And right now you’re voicing a main concern is it’s very expensive and it’s driving people away.
26:51 Jason A: Yeah. And I’m not the only voice. I mean, people talk about the mental health issues. There’s the minority disparities in health care that, you know, my family members talk about that I think are insane. You know, this is the type of feedback that needs to come in. And I think the best way to resolve it is to have everybody speak their own voice. And I just I’m just one voice. That’s why it needs to be a committee
27:13 Emily: Okay. Well, thank you so much for bringing that up.
27:15 Emily: Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats, and I’m now booking for the 2023-2024 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Ask the potential host to go to PFforPhDs.com/speaking/ or simply email me at emily@PFforPhDs.com to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.
28:35 Emily: Third on our list is transit. Tell us what you’ve been doing on that front.
28:40 Jason A: Stanford took away free transit benefits and May June and people are very angry about that. So I’m
28:49 Emily: Are we talking about on Stanford’s campus like busses? Are we talking about trains or what level of transit?
28:55 Jason A: Trains, yeah so rent is very, very expensive in Palo Alto. I don’t know if you’ve heard of so there’s a train that was very convenient that Stanford used to use, used to purchase the monthly pass for, and so I’d like to see that returned. Furthermore, I like on the subject of retirement benefits, costing them nothing. Every employee at Stanford has access to purchase those tickets pretax, which is an effective 30% discount to Stanford students. Right. So and yet another payroll benefit that costs them almost nothing that they can extend so that their employees get thousands of dollars every day. So I would say that that is the transit element that I would like to see happen.
29:40 Emily: Plus the environmental benefits of incentivizing, using public transit over other forms of transportation.
29:47 Jason A: Absolutely. As part of, you know, the Stanford just inaugurated a new school called the Doerr School of Sustainability. So yes, I totally agree with those arguments, although I am a little bit focused on the taxes because I’m a little bit biased on. Yeah.
Income Tax Withholding Negotiations
30:03 Emily: Great. All right. Fourth topic and one of my favorites, the lack of income tax withholding on paychecks for non employees who are U.S. citizens and residents of for tax purposes. And for that group, the possible requirement to pay estimated tax. So this is the issue that you and I first got connected over. So, yeah, I’d love to hear what you’ve been talking about on that front with the administration.
30:29 Jason A: You know, Stanford is an educational institution and I think it is on them to educate their students on their taxes. So one of the things I’ve been working with, graduation council, are these tax office hours. Well, where the government, the student government will purchase the CPAs time and will, you know, explain how to, how to do this. Students really don’t know. You know, I was fortunate enough to grow up in a high school district that literally made every single 18 year olds in your file taxes by hand and like a dummy scenario. So like I you know, you can go to the post office and get your tax forms. I didn’t know that. Right. So I came in knowing every single dollar that I earned, I have to pay tax. A lot of people don’t know that. So at the office hours, you have a wide breadth, you have your international student who’s dealing with tax treaties and all sorts of stuff, and then your domestic student who is this is their first time in their entire life that they’ve earned income and it’s a fellowship and they don’t get their W-2. It’s not you know, TurboTax can’t handle it. And, you know, TurboTax and professionals will get the advice wrong on certain aspects. So one of the things that I was fortunate enough to get Stanford to do is to take a stance on health care fees, the taxability of health care subsidies on fees. So a lot of students at Stanford, which is really why I’m excited to talk to you today, are are falsely paying taxes on their health insurance stipend. So they they get charged at Stanford $7800 a year and some people that’s partially subsidized and then it’s reported funk funky on the 1088 and 1098 is not an income tax. It’s just a it’s just a education benefits, deductions and credits right and graduations aren’t taking those deductions and credits. It’s really the wrong form for them. So you know stand for housing affordability issue. But, you know, I’m so glad that Stanford talked to you. I mean, the reason why they’re hiring you for this is I’m hoping, you know, so we can save graduates from $3,000 of taxes a year. Right. We have an affordability crisis where people are going to the food pantry every month with their wagons and children. This is $3,000 that they don’t have to be paying. Right. And so, you know, when I was student government and I had this from government to government is paying a CPA like $500 for their time. Right. And then you’ve got 100 people coming in and they’re overfull and each one of them is is saving thousands of dollars. Right. This is like the, you know, retirement, transit. But this tax stuff is probably the easiest way that Stanford can take initiative and stop all of this. You know, years ago when I was starting my advocacy on this, a Stanford person told me that that the interest and penalties that students pay every every April as part of their tuition rate, as part of their tuition, they don’t know. They come in. They they don’t know they need to make estimated payments. And then they get you know, they get those fees. That’s their tuition. It just made me so angry that they that they could send an email to everybody today. But this is an example of tenacity where Stanford’s like, it’s not my problem. I don’t want to be liable. What not. Right. But that’s not true. Okay. They they can say this is what a typical student does. You know, my high school in Marietta, Georgia, explained to us how to file taxes in a theoretical scenario. Stanford can do it, too. So, you know, I’m really glad that you’re coming on, you know, a couple of weeks to talk about that. So that’s the end of my long rant. But I could go on.
34:16 Emily: Absolutely. I mean, you hit on several different issues in there, which I think are incredibly important. So let’s start with that. Okay. $7800 in what I in my framework, it’s called awarded income. So it’s fellowship scholarship type income, not reported on W-2. That’s what I call awarded income. And as you were saying earlier, awarded income. Like you have to assume it’s taxable right from the outset. You have to assume that as part of your taxable income, unless you can prove that it went towards paying a qualified education expense and then it gets to be tax free. So the argument here is that whether or not health insurance premium paid, you know, for university health insurance for a student is considered a qualified education expense. And in my opinion, the opinion of the CPA hired to, you know, work with me on this. It is under limited circumstances where it’s required of the student and the student is purchasing it through the university. And that means that that premium or that means that the amount of money that goes towards paying the premium gets to be tax free because you all have such a high number on that. That 7800 really makes a big difference to you all, especially it’s going to be a lesser effect at other other institutions, but still in effect. And so it is an important thing to know that if you receive a 1098-T, that amount of that premium is not going to appear in box one as a as an education expense because it’s not a qualified education expense for the other benefits. As you were saying earlier, the Form 1098T is not designed for the tax free scholarships and fellowships benefits. It’s designed for the lifetime learning credit. It’s designed for the American Opportunity Tax Credit. But that’s not the one grad students are taking. They’re taking tax free scholarships and fellowships. So anyway, the 1098T is like, okay, as far as it goes, but you have to have this inside knowledge that it’s not a complete document. It doesn’t actually list all your qualified education expenses. And that’s a real disconnect. People think they receive a form and it’s kind of trustworthy and it’s really not. You have to double check everything on it to make sure that it’s complete and accurate for your situation. Oh, I’m going on my rant now too.
36:11 Jason A: Yeah, well this is why it’s really important to read those really dull IRS instructions after having three and a half years of legal experience. And you view me the legal brains like, well, health care is disallowed in sections two and three for undergrads, but it’s not disallowed in section one for graduate students. And then you’ve got a CPA. So like I’m in office hours, I’m literally arguing with someone who is has their own tax advice over the phone. And I’m like arguing with the professional over this because they’re wrong, because professionals get this wrong. And this is why Stanford needs to step up and take a stance here, because that’s a lot of money here. And anyway, it also kind of points to how our government should function because it shouldn’t require years of legal experience to be able to navigate our tax code.
37:02 Emily: I totally agree. It’s interesting that you and I have kind of come to this in a similar way of just like I just I just read the thing like, I just sat down and read it, like, completely. And once you do that a few times over a few years, like you kind of get used to the language and it’s not so intimidating. And you can make those connections like, Oh, the definition of qualified education expense is different depending on which benefit you’re talking about. Oh, the definition of earned income is different depending on which tax benefit you’re talking about, but you only pick up on that after, you know, exposure. And as you’re saying, it doesn’t it’s very hard to find, I mean, this is the experience my client is. But if you work with me, it’s because they can’t find a CPA who’s versed in this because it doesn’t pay. This is not their typical client base. And so you either have to find a CPA and really educate them or somehow find a magical unicorn, which I have not found who is like already well versed in this. But anyway, that’s why people end up working with me, because while I’m not a CPA, but I have read this and I’ve really tried over years, including professional consultations to understand what’s going on, and now I can communicate that
38:04 Jason A: Yeah, I mean, humans were never meant to read all IRS instructions document, so I don’t really want to fault them for it, but that’s just the world we live in. So.
38:16 Emily: It’s tough, especially because even many tax preparers, CPAs included end up relying on software to prepare the returns, and they’re not necessarily deeply analyzing what goes in and what comes out of that software. And if the software, as you said earlier, like TurboTax, is not designed to handle, like you can do it if you know the tricks, but it’s not intuitively designed to handle this income. And so if the software is letting you down, but you don’t even know enough to know that it’s letting you down, it’s a really, really tough area. Oh, I’m getting fired up about this, too. I’m like, I need to create a software solution. Okay. Anything else you want to say about this topic of estimated tax or the reporting or the taxability of like this fellowship type income?
38:55 Jason A: You know, I just want to add like my one sentence obstruction, which is what I do is I go to this website called Smart Asset. I put in my expected income. I ignore the FICA taxes and I look at the federal income and state income, and I take that number divide by four. And that’s what you need to be paying every quarter. And if you forget, you’re going to be splashed with interest and with interest and penalties. Interest rates high now. So if you get a fellowship, you owe money. Even if they don’t tell you
39:29 Emily: Exactly. And that’s the same website that I recommend when I teach this as well for like, okay, honestly, the best best thing to do is to fill out the estimated tax worksheet in form 1040-ES. Yes, but a lot of people don’t do that. I understand. So that calculator is a really good like substitute. You may be paying more than the bare minimum you’re required to, but that’s okay. Like if you accidentally overpay a little bit, you’ll get a refund at the end of the year. And it’s a quick way to get some peace of mind that you’re like, you’re on top of this issue. You’re not going to be fined at the end of the year, most likely. So yeah, I really like that suggestion. And the other thing that I’ll mention, just throw in there for potential future advocacy on on your front is that the university that I went to, Duke, they did withhold income tax on fellowship, paychecks and fellowship stipends. I’ve only heard of a couple of institutions that do that. It’s very, very, very rare. But it happened to be that the one that I attended did that and it causes other complications with reporting. So it’s not an easy, easy solution. But they did it somehow.
40:26 Jason A: Stanford told me that they can’t withhold and now you say that that that’s not true.
40:32 Emily: No, it’s not true.
40:32 Jason A: They don’t have to. But you know just, another reason why it’s not my problem go away administrator, but. Yeah, I mean I talked to them about this and I totally, I it might not be the best solution but I think it’s better. People have their rent deducted. You know in the tax office hours, they’re like, my, I have this deduction why wasn’t taxes put in there. I’m like well your rent deduction didn’t include a tax deduction. So, anyway.
41:01 Emily: Yeah, it’s definitely not impossible. But as I said, it’s very, very rare. What ended up happening in my case is that the income then was reported on a 1099 Miscellaneous. So they basically so they had a box for your amount of income and they had a box for your amount of withholding. They had to use a form that did that because the 1098T doesn’t have a box for how much income was withheld from it. Now compared to back when I was in graduate school, there are 2 1099 options that sometimes gets used for fellowship income. One is the 1099 MISC and one is the 1099 NEC, I’m not sure which Duke is currently using, but I’ve noticed that some funding agencies end up putting fellowship income on a 1099 NEC, which brings up a whole other issue, which is people confusing their fellowship income with self-employment income, which shouldn’t happen and just PSA to anyone who’s listening to this, like do not allow that to happen on your tax return because the fellowship was not self-employment income, in my opinion.
41:50 Emily: Okay.
41:51 Jason A: It’s very expensive mistake.
41:53 Emily: Incredibly, I mean.
41:53 Jason A: Very expensive mistake, yeah.
41:55 Emily: You mentioned the 7.65% for your FICA tax it’s double that right for self-employment tax. So huge, huge issue to get into and actually I’ll reference in the show notes an earlier podcast episode I did with someone who went down that mistake route and had to correct it with the IRS. Okay. So among these four areas that you’ve been working on, along with student government and some other people, are there any like big takeaways or lessons that you can convey to the listener about like best practices around doing this advocacy around financially related policies on campus?
Best Practices for Financial Policy Advocacy in Higher Education
42:24 Jason A: I you know, again, tenacity to read the documents. You know, I think we’ve gone through three examples where a Stanford administrator says the wrong thing because there’s just not there probably want to go away but IRS instructions twice and then know. Yeah so like you know on our outline here about how to negotiate for better benefits, the first step is to ask and when they say no, do your homework with with the documents. And you know, I consulted that retirement lawyer and graciously gave me that advice to confirm what I had read in the documents. So, you know, student governments can engage lawyers, unions can engage lawyers, you know, get your own advice and stick them with the letter that says, no, what you said was false. Oh, and then get it in writing too writing is really important because. Yeah.
Best Financial Advice for Another Early-Career PhD
43:22 Emily: Absolutely. Well, thank you so much for that. That advice, that suggestion, that route to go down. Let’s end with the question I ask all my interviewees, which is what is your best financial advice for another graduate student or another early career path? Ph.D. And it could be something that we’ve touched on already in the interview, or it could be something completely new.
43:40 Jason A: So. Okay, maybe this might be this, this might make you chuckle a little bit. So what I do when I file my taxes is I use, I do it redundantly with two softwares and then I submit it with the free one. I make sure the numbers match and it’s actually debugging that is how I’ve really learned the tax code of of all this. So and then so don’t pay money to the to corporations that lobby for our taxes to be complicated. So I will not do that. But anyway so that’s that’s the first piece of advice.
44:14 Emily: I want to make a small comment on that because I love that suggestion A lot of people don’t know. So I’ll mention TurboTax just because I’m more familiar with the software. A lot of people just, you know, input their numbers and then the the return is generated and filed. But there’s a step before that where you can preview your return. So you preview the 1040 and any other forms that have been generated through that process. And that’s what you can compare apples to apples with another software. You also preview the 1040 over there. You get a nice PDF or whatever, and there you can compare line by line to make sure everything matches or see what the discrepancies are. So you don’t just have to blindly submit whatever forms this software is generating. You can actually look at the final form before it’s submitted.
44:55 Jason A: Yeah, and, you know, TurboTax has like the automatic import. So it’s not necessarily that you’re entering it twice. It can be a just a double check
45:04 Emily: Very good. Well, I love that suggestion. Also for me, filing my tax returns manually, like literally by hand or through the free fillable form system was a great education. And I’m very I don’t know. Is the IRS still on track for their own software coming out for upcoming tax season? I know I’m excited too. Okay what was your second suggestion
45:26 Jason A: You know, so there’s this Reddit financial or personal finance page with the flowchart on what to do. I would Google that and follow the flow chart. And then one of those things after you’ve done emergency savings is, you know, Roth IRAs can be a vehicle for your emergency savings under certain circumstances because Roth IRAs, you can pull out the contributions, you can put your emergency savings in cash and a Roth IRA or Treasury bills if you if you want to do that, low risk. And then, you know, if you have the emergency, you have the emergency. But if you don’t have the emergency and five years at six grand, you know, then you’ll have $30,000 in your retirement and your Roth IRA when you end, and then you’ll go straight into that high income job will not be eligible. So, you know, if you can, I would put your savings in cash in a Roth IRA until you have enough cash to start investing it. But.
46:25 Emily: This is an advanced technique. It’s not one that I recommend because I think it’s difficult to do that. The qualifier that you mentioned is keep it in cash or keep it in a very no risk investment inside the Roth IRA. That’s what I think is difficult and where people might not complete this whole process correctly, because it is to me very important that you not take any risk with your emergency fund. But yes, you can still keep it inside the Roth IRA. I love your point of like use that eligibility to contribute to the Roth IRA when you have it, because it may not be around forever once you get to those higher paying jobs. So good suggestion, but I want them to listen to your whole suggestion.
47:01 Jason A: Yeah, it’s all about the audience here. You know, a Stanford PhD student, you know, you’ll find people who are ready to do that advanced topic. I mean, graduate students but yes, you’re right. Totally right about that.
47:14 Emily: Well, Jason, I’m so excited that you agreed to come on the podcast. This is a wonderful interview. I hope our listeners will take some of what we talked about today and go back to their own institutions and start advocating for some of these same issues or using some of the methods that you mentioned. And I especially love your tip about basically perseverance, both in reading the documents and doing your homework and also with your communications, because you’re going to get told no. And like you said, just it’s not personal. Let it roll off your back. Come back. You know, do your homework, etc. So this is really, really valuable, I think. Thank you so much.
47:42 Jason A: It’s been my pleasure. Thank you for reaching out. And I want to say good luck to all of your listeners in their their financial pursuits and advocacy and good luck to SGWU you as well, because we’re going to we’re going to fight like hell to get to get all the things we deserve.
48:04 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.
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