Expected impact of House tax bill on MD/PhD programs

[future_gradmed]

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To any current or future MD/PhD students and program admins: If passed, how do you think the House version of the tax bill will affect MD/PhD programs and students? Do you think there will be a decrease in number of students applying to funded MD/PhD programs, or an increase in drop-out rate? Or alternatively, do you think its effect on graduate students is being overstated?

 

[Lucca]

The effect on graduate students is certainly not being overstated. Most are seeing a 400-500% increase in their projected tax burden. That would make getting by on a single income in most cities significantly more difficult. There are already very few good reasons to go to graduate school and dedicating a decade or more of training just to have a chance at a career in science.

In terms of MD/PhD students, it really depends on how and where the funding comes from. Will students in the medical years also be charged for the MD tuition waiver? Its not clear to me but, and medical school tuition tends to be higher than the “nominal” graduate school tuition waiver.

I think the right thing to do in response would be for all schools to set the tuition rate for graduate students to 0, doing away with this “waiver” entirely, but schools are unlikely to do that because they profit off of the practice. (See: Perspective | Universities are also to blame for the GOP’s ‘grad student tax’)

If the tuition waiver tax portion of the House bill lands on the President's desk, I wouldn’t consider the programs worthwhile. Too much lost income for too many years for too few jobs that are too competitive to obtain. I’m fine “living like a grad student” during training, but I value myself a little higher than barely making enough money to pay rent and eat food. There are simply much better options for capable people to take up instead even if they are less attractive for non financial reasons than research.

 

[MicrobioBro]

If the bill passes the senate in its current state, I wouldn’t consider the programs worthwhile. Too much lost income for too many years for too few jobs that are too competitive to obtain. I’m fine “living like a grad student” during training, but I value myself a little higher than barely making enough money to pay rent and eat food. There are simply much better options for capable people to take up instead even if they are less attractive for non financial reasons than research.

It is my understanding that the Senate version does not include this portion, just the House bill does. Is that true? Do you see any cases of the universities finding a way to circumnavigate the taxes to that way students aren't taking the brunt of if?

 

[Lucca]

It is my understanding that the Senate version does not include this portion, just the House bill does. Is that true? Do you see any cases of the universities finding a way to circumnavigate the taxes to that way students aren't taking the brunt of if?

The Senate are voting on their own version. There are a lot of similarities between them. The tuition waiver tax and the removal of the ability to discharge student debt upon death are in the House version only. Senate has already voted to proceed on a vote on the bill on the floor.

I have heard of protests occurring at several universities (Penn, Yale) where graduate students have demanded university administrations make promises about taking actions to circumvent increasing the tax burden on graduate students but no concessions have been made that I have heard of. For the reasons listed in the article I linked above - namely that universities have a financial motive not to do away with graduate tuition altogether which would be the most sensible option - I find it very unlikely that universities will take such measures unless pressure on them to do so (from the student body, donors, the public, etc) grows. Right now the only incentive they have is that it will be harder to recruit and retain the best talent they need if more people are discouraged from going to graduate school, but I have a feeling that even with the extra tax burden there will still be more than enough people applying to grad school, especially from abroad.

 

[phonyreal98]

In terms of MD/PhD students, it really depends on how and where the funding comes from. Will students in the medical years also be charged for the MD tuition waiver? I believe they will, and medical school tuition tends to be higher than the “nominal” graduate school tuition waiver.

My understanding is that your tuition waiver would be taxable only if you are an employee of the school, such as an RA or a TA (based on the house version of the bill); however, if you are on a fellowship or are otherwise not an employee of the school then your tuition waiver will not be taxable. The "rule of thumb" that I've read that seems to pass the "sniff test" for me is that if you don't receive a W-2 then your tuition waiver will not be taxed, as you are not an employee of the school. For my program, we do not receive a W-2 during medical school years, but we do receive a W-2 during graduate school years.

 

[Lucca]

Senate has passed their version of the bill this morning 51-49

Analysis | Winners and losers in the Senate GOP tax bill: A running list

Whether or not the tuition waiver tax and elimination of the student debt write-off will remain in the version that reaches Trump's desk will have to be decided in committee between House and Senate as they reconcile the differences in the bill. Since the Senate bill ended up not including those elements, it could be that this particular element of the tax bill does not make it to the President's desk.

That being said, it's all but certain that the individual mandate will be repealed, 1.4 trillion dollars will be added to the deficit as healthcare expenses are projected to continue rising with sicker and older people paying more for healthcare. The bill will still affect everyone.

 

[Fencer]

This is great news!!!!
Report: Lawmakers Drop Grad Student Tuition Tax | Inside Higher Ed

Original Bloomberg report:
Tentative Tax Deal Scraps Hit on Tuition for Graduate Students