The House Republican tax plan could hurt Baylor University’s fresh focus on research and graduate education by ending a tax exemption for graduate students’ tuition waivers, Baylor officials said.
“Obviously, we are monitoring the situation closely and will work with the appropriate parties in Washington, D.C., to communicate our concerns,” President Linda Livingstone said in a brief statement on the provision Thursday.
Larry Lyon, vice provost and dean of the Baylor graduate school, was blunter, calling the plan “probably the most serious threat to doctoral education we have ever experienced.”
“The short-term effects would be to drastically punish doctoral students,” Lyon said. “The long-term effects would be to drastically harm the economy.”
Doctoral students get tuition waivers worth about $30,000, and most also get a stipend of about $20,000 to teach a class or work with a professor, Lyon said. The tuition waivers and stipends are exempt from federal income taxes, but the proposed tax plan would scrap that exemption.
A graduate student with a $30,000 tuition waiver and $20,000 stipend would face an income tax bill of about $8,000, based on a 17 percent tax rate.
“Our hope is that we don’t try to reduce the cost of tax reform by raising taxes on graduate students, who are our future, and are only making $20,000 a year,” Lyon said. “I know every group thinks they shouldn’t be singled out, but this is a tough one.”
Almost all of Baylor’s about 800 doctoral students and about 250 of approximately 2,500 graduate students would be affected, he said.
U.S. Rep. Bill Flores, R-Bryan, has publicly supported the tax plan, but he told the Tribune-Herald he hopes the proposal will be changed to keep the exemption for graduate students’ waivers and stipends in place.
Flores has worked with Baylor, Texas A&M University and the University of Texas as he analyzes the bill, he said.
“I can argue that by having folks go to grad school, get a grad degree, then they come out and make more money and pay more in taxes,” Flores said. “My argument is that if we retain current law, we’ll actually raise more money than we would the other way. That group moves into a higher income class and is paying more taxes ultimately.”
He predicted a 50-50 chance of a successful fix, but support for the change from the White House would make him more confident.
“This issue regarding grad students with tuition discounts is a middle- to lower-income issue,” he said. “That’s where the president has been emphatic in terms of granting relief to that income group on taxes.”
Livingstone, who started as president June 1, has announced plans to increase Baylor’s focus on research. The tax plan would potentially place research opportunities, which are often tied into graduate programs, in harm’s way.
In her statement on the tax plan, Livingstone attached a letter from the American Council on Education to the House Ways and Means Committee, which passed the bill last week. The letter states the bill would “discourage participation in postsecondary education.”
Senate Republicans also released their own version of a tax plan last week. The Senate version would not repeal tax exemptions for graduate students, the Washington Post reported.
The American Council on Education letter, also signed by dozens of organizations involved in higher education, states 57 percent of tuition reductions went to graduate students in the fields of science, technology, engineering and math, according to a U.S. Department of Education study.
Removing tax exemptions for graduate students would make graduate education unattainable, said Jeff Strietzel, a doctoral candidate in higher education studies and president of the Baylor Graduate Student Association.
“In the global economy that we have, and in the knowledge economy that we have, we would want to create more advantages for the leading minds for developing our future faculty, for developing our future researchers, scientists and thought leaders of tomorrow, not try to make it more difficult,” Strietzel said.