Here's how much the House tax bill could cost Iowa's grad students

Michael Belding is a doctoral candidate at Iowa State University, where he works with a professor helping teach history classes and grade undergraduate students’ coursework.

The 20-hour-a-week job pays about $2,100 a month.

In addition, the 27-year-old Belding is taking two courses for which the university waives tuition.

Under a U.S. House-approved tax reform bill penned by Republicans and passed mostly along party lines on Nov. 16, the waived tuition would be considered income requiring graduate students to pay a tax on money that in most cases they never see or have access to.

And while the Senate tax reform proposal does not tax tuition waivers, concern is mounting that the provision will re-emerge when differences between the two bills are hashed out in a conference committee and reconciled into one piece of legislation.

Belding said he would see his tax liability double if the measure, as passed by the House, becomes law.

“It would be a substantial burden,” said Belding, a doctoral candidate in Rural Agricultural Technological and Environmental History. He hopes to complete his dissertation in two to three years. If the tax is approved, he said, it will take him longer to get his doctorate.

'Any way you look at it, it's not good'

On Wednesday, thousands of graduate students nationwide, enraged at what they perceive as an attack on the higher education system, protested the House tax plan at rallies and by walking out of classes, offices and research laboratories. In Iowa, about 80 University of Iowa graduate students gathered on the campus, some carrying signs protesting the tax.

UI President Bruce Harreld addressed the students, expressing his support for them and opposition to the proposed tax.

“It’s not good, not good at all,” Harreld told the Des Moines Register this week about the House’s tax measure.

“They won’t be here to do the research and so we’ll have to do less research or find other people to help do the research," Harreld said. "Any way you look at it, it’s not good.”

The Iowa City university has about 2,818 graduate students who last school year received tuition waivers valued at $24.9 million, according to university officials. Under the House bill, if a student received an average tuition waiver of nearly $9,000 and was in the 15 percent income tax bracket, they would pay $1,325 in income tax on the award.

Harreld said when he and other UI supporters were in Washington, D.C., recently, they talked with Iowa’s congressional delegation about the impact of the tax reform bill on higher education. In addition to tuition that is waived for graduate students, the Tax Cuts and Jobs Act would eliminate the student loan interest deduction. Harreld said lawmakers seemed sympathetic to the concerns raised about the proposals.

In early November, the presidents of Iowa’s three public universities penned a letter to Iowa’s congressional delegation detailing their concerns.

“There are provisions of the bill that would discourage students from pursuing higher education, increase the costs for students and their families, and jeopardize our campuses’ ability to operate cost-effectively,” the public university presidents wrote.

Categorizing tuition waivers as taxable income would increase the tax liability for the three universities’ more than 8,000 graduate and professional students by $3,000 to $10,000, the presidents wrote. At the University of Northern Iowa, full-time graduate assistants receive an average stipend of $5,450 annually. “Increasing their tax liability would result in a net loss of income,” the presidents’ letter said.

Concerns over education accessibility

About 1.8 million graduate and professional students attend the nation’s public and private universities, according to the Washington, D.C.-based National Association of Graduate-Professional Students. About 57 percent of the students are women.

In addition, 12 percent are black, 11 percent Hispanic and 7 percent Asian, the association’s data shows.

“Those numbers are low, we know, but they are growing,” said Samantha Hernandez, the association’s director of legislative affairs. “Part of the reason why those numbers are growing is because now, graduate education is accessible. If this tax goes through, it won’t be. (The proposed tax) would limit who is able to attend a university and how long they are able to attend.”

Several graduate students and others have written essays in local media about their contributions to the country’s economy and global competitiveness in the areas of science and technology. Some Democrat lawmakers have also written essays, including Rep. David Loebsack.

“The goal should be to increase access to college and support students when they are just beginning to look for a job,” Loebsack wrote. “Cutting these deductions hurts everyday Iowans.”

Rep. David Young, a Republican, has a differing view.

”Overhauling a tax code which is 70,000 pages long is a multi-step process,” he said in a prepared statement to the Register. “Considered on its own I do not support repealing the tax credit benefiting graduate students. I do believe this process of breaking apart the status quo tax policies hurting middle class Iowans will result in tax relief, simplification and fairness for hardworking Iowans.”

In a call with Iowa reporters on Wednesday, Sen. Chuck Grassley said that while he favors keeping tuition waivers as non-taxable income, he would not vote against the bill if the House's measure made it into final legislation.

That is disappointing to Vivek Lawana, 31, ISU’s Graduate and Professional Student Senate president.

“This is a scary situation,” he said. “If it goes through, it’s definitely going to discourage people from pursuing a higher education. And it’s going to keep international students from coming to this country. They’ll go somewhere else where education is more affordable.”

Iowa State has about 3,350 graduate and professional students who last year received tuition waivers totaling $24.5 million, university officials said. If the students received an average tuition scholarship of nearly $7,400 and were in the 15 percent income tax bracket, they would pay $1,100 income tax on the award

“These are our future faculty and our researchers,” said Roberta Johnson, ISU’s director of student financial aid. “We should not be discouraging the great things they are doing that will help us to lead better lives.”