Update: On Dec. 1, Little Village received a reply to the questions that were emailed to UI President Bruce Harreld’s office, and that response had been added to the story.
A rally on the University of Iowa Pentacrest protesting the federal tax bill passed by the U.S. House of Representatives attracted a crowd of about 60 on Wednesday. The crowd was mostly graduate students, which wasn’t surprising, since the change would drastically increase the amount of taxes graduate students pay.
“Because of the changes in the new bill, most graduate students will have to face the question of whether or not they are able to continue their graduate education, based on whether or not they can afford it,” Bailey Kelly, a UI graduate student and president of the Campaign to Organize Graduate Students (COGS) at the university, told Little Village. COGS is part of the United Electrical, Radio and Machine Workers of America, and has represented the unionized members of UI’s graduate student body since 1993.
The tax bill passed by the House earlier this month has been widely criticized for disproportionately benefiting the wealthiest Americans and corporations. No Democrats voted in favor of the bill.
“We’re not going to let the Republicans give massive tax cuts to the wealthy on the backs of graduate students and other workers,” Kelly said.
The House bill eliminates a section of the tax code dealing with “qualified scholarships.” Currently, the tuition waivers that many graduate students rely on to make their education affordable are not subject to federal taxes. The House bill would change that, making the amount of tuition waived count as taxable income.
“It’s income that we never see, it never passes through our hands. It’s all handled by the university,” Kelly explained. “It’s a process that been in place for decades.”
According to the Council of Graduate Schools, a national organization of graduate school deans, approximately 145,000 graduate students depended on tuition waivers in 2012 (the most recent year for which data is available).
National Public Radio chose Kelly Balmes, a graduate student at the University of Washington in Seattle, to demonstrate the impact of the House bill on a typical graduate student. Balmes receives a stipend of about $30,000 a year for the work she does as a graduate student, slightly less than a Seattle minimum-wage earner makes annually (the city’s minimum wage is $15 per hour). Balmes also benefits from grants that are paid directly to the university (also currently not taxed) and tuition waivers, all of which are worth slightly more than $30,000. Under the changes in the House bill, Balmes’ taxable income would more than double. She would go from paying $2,334 in federal income taxes to paying $7,488.
In its analysis of the impact of making tuition waivers taxable income, Vox quotes University of Texas Professor Claus Wilkie who tweeted, “It would really upend the entire American PhD system. Currently the rule of thumb is the recommendation that you give to prospective PhD students: If they have to pay tuition and they’re not being paid a living stipend, they should not enter the PhD program.”
The impact the tax bill would have on higher education isn’t just limited to graduate students. Tuition waivers that undergraduates receive would also become taxable income, and the interest paid on student loans would no longer be tax deductible. The bill also consolidates three current college tax credits into a single credit. It would phase out the Coverdell Education Savings Accounts, which allows families to invest money for college tax-free, and eliminate forgiving student loan debt in cases where a student dies or becomes disabled.
Republican members of Congress have avoided commenting on the higher education changes in their tax bill. The New York Times contacted the House Committee on Education and the Workforce for comment on the bill, and was told by a spokesperson that by increasing household income the bill will “provide more Americans with more opportunities of their choosing, including continuing education.”
The changes in the House bill are not in the version of the tax bill currently under consideration in the Senate. If the Senate votes for that version, it would have to be reconciled with the House bill, and it is not clear if the changes would be included in the final version.
Several speakers at the almost hour-long rally on the Pentacrest urged listeners to contact their senators to oppose any version of the tax bill containing the change in the House bill.
There were two surprising faces in the crowd at the rally. One belonged to a passing jogger dressed as Santa Claus, who stopped to shout his support for the graduate students. The other was UI President Bruce Harreld, who briefly stood in the back of the crowd, and left without saying anything.
Little Village emailed Harreld’s office seeking comment on the rally and the tax bill, and received a reply from Jeneane Beck, UI’s assistant vice president for external relations.
“President Harreld attended to show support for the graduate students,” Beck said. She also pointed to a letter to the Iowa congressional delegation signed by the presidents of all three Iowa’s universities.
In the letter dated Nov. 14, two days before the House passed the tax bill, the three presidents wrote they were “deeply concerned” about all the parts of the bill that effect higher education. They specifically cited the provision making tuition waivers taxable income, describing it as “a significant disincentive to pursuing graduate education and undermine our ability to prepare highly specialized professionals to meet the economic and workforce needs across Iowa.”
After the rally, Kelly said she didn’t notice Harreld, and that the UI administration had not provided any statements on the House tax bill to COGS.
“But I feel the university and COGS are really on the same page on this,” she said. “I hope President Harreld saw the kind of passion we have on this issue, and for the university.”