WEST LAFAYETTE, Ind. – Dozens of Purdue University employees, among hundreds taking up the university’s offer for free or discounted tuition toward online degrees at the newly rebranded Purdue Global, recently received a surprise in the mail.

Corrected W-2 forms came with an explanation: You might owe income taxes on that free tuition.

In a letter sent March 22, Kathleen Thomason, the university’s comptroller, wrote that Purdue’s “tax experts recently concluded that beginning in the 2018 tax year, certain Purdue Global education benefits must be treated as imputed income, subject to all applicable taxes.”

Tim Doty, Purdue spokesman, said 33 of the 432 employees who took part in the tuition breaks at Purdue Global – either for themselves or their families – were affected by the decision on taxable compensation.

“Because we didn’t catch this up front, Purdue is going to cover the tax expenses for those 33 employees this year, and we will change our application forms to make clear the circumstances in which employees may be taxes for the benefit,” Doty said.

Doty said that the 33 people who received corrected W-2 tax forms either were in excess of the tax-free allowances offered by the IRS or the tuition break was used by a family member.

Doty said the average tax bill tied to the Purdue Global tuition breaks for those 33 employees was $750.

Purdue finalized the purchase of the former for-profit Kaplan University in late March 2018, after a year of higher education regulatory hoops and months of behind-the-scenes negotiations before that.

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Purdue Global – with approximately 29,000 students, more than 2,000 faculty members and 15 campuses, including one in Indianapolis – was touted as a third arm of Purdue, following the flagship campus in West Lafayette and regional campuses Purdue Fort Wayne and Purdue Northwest.

Purdue President Mitch Daniels, as the Kaplan deal faced criticism in certain circles, advocated Purdue Global as an extension of the university’s land grant mission, giving Purdue a way to reach nontraditional students who aren’t in a position to come to a residential campus, such as the one in West Lafayette.

That philosophy also fed Purdue’s offer to pay for staff members to get free tuition when the Purdue Global name took effect in April 2018. Their family members were eligible for a 50 percent discount for most Purdue Global programs and degrees.

How much is that worth? In 2017, Purdue announced that Indiana residents would get a 45 percent discount on Purdue Global courses, bringing the price to $220 a credit hour. Purdue calculated that a bachelor’s through Purdue Global would cost an Indiana resident $39,600.

Purdue also offers half-off tuition for children and spouses of Purdue employees, compared to the university’s $9,992 tuition for in-state students. Benefits cover 70 percent of general tuition for Purdue staff members, Doty said.

According to Purdue, tuition benefits aren’t taxable for undergraduate degrees at the West Lafayette campus for staff, spouses and dependent children, up to age 24. Tuition benefits do become taxable for those going for graduate degrees, for non-dependent children and in other circumstances, according to Purdue.

Attempts to reach employees affected by the taxes on Purdue Global courses were not immediately successful. Several employees taking courses, reached by the Journal & Courier, declined to comment this week.

“The university is proud to offer its employees the opportunity to grow, learn and advance or change career paths by offering tuition-fee remission opportunities on our campuses and through Purdue Global,” Doty said. “Purdue has invested over $1 million so employees and their families can continue, complete or further their education.”

Reach Dave Bangert at 765-420-5258 or at dbangert@jconline.com. Follow on Twitter: @davebangert.



