One GOP tax bill provision that needs be reconciled by the House and Senate concerns taxing graduate students’ tuition waivers. Should the final version of the bill include the House’s tuition waiver tax, current graduate students could see their tax burden increase by almost 400 percent without any change in their take-home pay.
It would represent the most blatant failure of federal graduate education policy in promoting “preparation for global competitiveness” and “ensuring equal access,” two tenets of the U.S. Department of Education’s mission.
Graduate education is fundamental to individual students’ career prospects, and indeed affects the United States’ global competitiveness in workforce and economic productivity as well as scientific innovation. Equally concerning to me as a professor of higher education, however, is the threat this tax increase poses to “ensuring equal access.”
For the last 14 years, I’ve dedicated my career to researching inequality in graduate education: the policies, practices, and social forces that explain why some groups apply and gain admission to graduate programs more than others, and why some are more likely to thrive in that high-pressure environment and complete their degrees.
For example, Eric Grodsky from the University of Wisconsin and I found that people whose parents haven’t earned a college degree are underrepresented among those earning advanced degrees. Florencia Torche at New York University similarly found evidence of this “educational inheritance” among those who attain doctoral and professional degrees.
Taxing tuition waivers would amplify existing inequities by presenting another deterrent to those who already face major barriers. It would also create new problems, distracting us from other critical conversations underway about expanding opportunities for graduate education. To prevent an exodus of current graduate students from their programs, we would need an urgent debate about how such taxes should be paid. As Margaret Spellings, who served as U.S. Education Secretary under (Republican) President George W. Bush acknowledged, “You can’t pay taxes with a waiver. We already ask too much of our graduate students.”
Absent creative solutions by higher education administrators, the vast majority of graduate students would have to take out sizable loans to pay taxes on something that never reaches their bank accounts. For anyone unsure about whether to enroll in the first place, the additional cost would tilt the cost-benefit analysis away from graduate degrees’ long-term earning benefits.
Of course many students already take out loans for graduate education. Here, too, existing disparities will be exacerbated by taxing tuition waivers. Whereas 28 percent of Black students finish PhD’s with more than $90,000+ in debt, only 4 percent of Asian and 9 percent of White students do. This data, from the Survey of Earned Doctorates, also show that average education-related debt among Black doctorate recipients in 2013 was $55,159, more than double the $26,741 average among Whites.
These disparities, which start with undergraduate education, are magnified at the graduate level due to trends by race in the fields that students pursue and how graduate students in those fields tend to be funded. Black students, for example, are much more likely to seek graduate degrees in service-oriented fields like education and social work where stipends are not always granted, and they are less likely to pursue degrees in the physical sciences where almost all graduate students are fully funded.
Increasingly, many middle class careers require graduate and professional degrees. One in three college graduates currently enrolls in such programs. More than ever, graduate education therefore needs a more prominent place in the national conversation about equal educational opportunity. A healthier policy would make graduate school more feasible, not less, for prospective students who don’t have wealthy parents to help them achieve their version of the American Dream.
Julie Posselt is an assistant professor of education at the University of Southern California. She is the author of “Inside Graduate Admissions: Merit, Diversity, and Faculty Gatekeeping.”