Modestly salaried, willingly overworked, and gifted with a penchant for detecting campus seminars with free food, graduate students serve as the bedrock of research at higher education institutions. However, within the coming week, the Senate may vote on a bill that could devastate graduate research in the United States. The Tax Cuts and Jobs Act, which has already passed the House of Representatives, overhauls the existing tax system and also removes a provision essential to students pursuing master’s or doctorate degrees.
While those pursuing graduate degrees are technically considered students, their lifestyles and responsibilities are far different from that of a typical undergraduate or professional school student and their function is often misunderstood.
We are members of the University of California, Los Angeles (U.C.L.A.) chapter of the national science advocacy group, 314Action, and our group is mainly composed of graduate students in the science, technology, engineering and mathematics (STEM) fields. Apart from the first year of graduate school, we and our fellow STEM graduate peers rarely take classes—in fact they are optional. Instead, many of us consistently spend over 60 hours a week during our degree performing research and serving as teaching assistants for large university courses.
The university compensates us for this work with a stipend adequate for covering basic living expenses. While professors receive most of the research recognition, graduate students often make up a majority of the researchers in a laboratory. In fact, a doctoral degree is only awarded after we have demonstrated independent success at the front lines of scientific research. That entails planning the nuts and bolts of an experiment, acquiring and interpreting data, and articulating the results into cohesive scientific articles.
The research that graduate students conduct provides massive benefits to universities. Novel graduate student research can result in patent creation for which the university claims ownership. It also leads to publications in high-end science journals, which serve as invaluable advertisements for universities that help them attract top-notch talent and procure lucrative research grants. In essence, graduate students aren’t just learning while they are in school—they are actively creating, and their labor often results in significant technological and scientific advancements.
Even though many graduate students do not take classes or consume many educational resources, we still are charged a graduate school tuition fee. However, it is standard practice for the university to waive tuition in exchange for students agreeing to work as instructors or researchers for the school. This waiver is not considered a part of our paycheck, reflected in the IRS tax code Section 117(d)(5), stating that graduate students performing research or teaching are not taxed on tuition reductions. However, the House version of the Tax Cuts and Jobs Act proposes to repeal this provision, making graduate students subject to taxation on these tuition fees. While only the House version of the bill includes the repeal of this provision, if the bill passes the Senate, both the Senate version and the House version will need to be reconciled, leaving the door open for graduate students to still get taxed on tuition.
If the bill passes the Senate, the impact could be profound for many in higher education. For example, at U.C.L.A. the out-of-state graduate school tuition fee is $32,000 a year, while the typical graduate student salary, which can vary slightly with experience, hovers around $30,000 a year in STEM fields. Under the proposed tax plan, out-of-state graduate students making $30,000 a year could be subject to taxes on over $62,000 of income, which could push a portion of their income from the 12 percent tax bracket to the 25 percent tax bracket, even after the standard deduction. In effect, these students would see a tax increase of over $4,000 in federal taxes per year over what they currently pay. Although many out-of-state students do switch their state residency status during graduate school, which could help them avoid some of these tax increases, international students, accounting for one sixth of the graduate population at U.C.L.A., would have no such option for avoiding the tax hikes. Worse, roughly 40 percent of graduate students nationwide attend private institutions, where tuition fees can often be in excess of $50,000 a year, and these students could see tax increases of more than $8,000 a year under the newly proposed plan.
With differing consequences that depend strongly on student citizenship, state-residency application protocols, and institution-specific salary and tuition rates, it would take a team of overly caffeinated accountants to fully assess each of the possible tax outcomes for graduate students under the new plan. In certain situations it could be relatively minor, while in others, it could be absolutely devastating. But ultimately the new tax plan is most frustrating because it relies so heavily on these distinctions in the first place.
Under the new tax code, seemingly arbitrary differences between graduate students can massively affect how much they pay in taxes and ultimately whether they can afford grad school. For example, a California resident enrolled as a biology graduate student at U.C.L.A. would pay approximately $4,000 a year in taxes under the newly proposed plan, compared to roughly $3,000 under the currently existing plan. However, a California resident enrolled as a biology graduate student at U.S.C., a private institution 13 miles away, would be taxed as much as $11,000 each year even though both students fulfill the same basic research obligations and have nearly identical pre-tax take home incomes.
Under the current tax code, distinctions like this do not matter—both students would essentially be taxed the same. However, in the new tax code, such distinctions may ultimately determine where and if certain students can afford to continue grad school. Further, graduate students in non-STEM fields could face even harsher repercussions as many of these students receive less university financial support and have lower base salaries than their STEM-based peers. The proposed tax hikes would hurt students from disadvantaged backgrounds the most, a demographic that is already underrepresented in STEM and higher education.
In addition, many international students, depending on their home country’s tax policy, would likely no longer be able to pursue graduate education in America and would be forced to enter academia at other foreign institutions. Our country would effectively be losing some of the world’s brightest minds and relocating them to international competitors. High end private graduate programs could become infeasible for all but the wealthiest of students, perhaps sparking large migrations from private institutions to public universities, which would overburden the already tenuous public higher education infrastructure. In certain situations, students would be forced to give up on graduate school entirely.
This effective brain drain from science could have long term effects as well. While in the immediate future, postdoctoral researchers may be able to pick up the slack from a depleted graduate student workforce, eventually, professors would run out of qualified researchers to run their experiments, severely impeding the advancement of knowledge. Additionally, graduate school produces some of our country’s most innovative problem solvers in diverse subjects such as anthropology, economics and the biomedical sciences. Many lucrative fields, such as pharmaceutical development, rely on these highly skilled doctorate degree holders to propel innovation. A gap in the graduate-trained workforce caused by the revised tax code could stagnate these industries in the future and hamper economic development.
While nearly all of academia would be affected, STEM fields would receive a particularly significant blow as a majority of doctoral graduate programs are currently offered in science and technology subjects. As a science advocacy group, we can testify that the public benefits immensely from scientific progress. For example, a recent study concluded that every dollar spent by the National Institutes of Health (NIH) led to a $2.21 return in economic output. Another report observed strong correlations between countries’ investments in basic science research and their overall national wealth. The NIH reports that the average American life span has increased by 30 years over the past century, in part because of a better understanding of human health.
Technologies such as GPS, MRI imaging and the basic transistor, found in every smartphone device, were all borne out of basic science research and have since gone on to revolutionize our society both economically and culturally. As a society, we need science both at present and in the future to address the world’s most pressing issues such as climate change, national security, and public health epidemics, and it’s difficult to overestimate how important graduate students are to science.
The revised tax code in its current form will reduce the choices available to talented students in their pursuit of higher education. In addition, it can pose enrollment hurdles for private educational institutions who offer very similar services to other public universities but could fail to be competitive due to their comparatively more restrictive tax structure under the new plan. In the best case, universities could find workarounds to the tax increases by artificially reducing tuition fees through additional fellowships or scholarships. However, the actual effectiveness of such reactionary measures is still unclear, and any bill that induces such unnecessary administrative gymnastics should be questioned in the first place.
Graduate school can be a difficult, poorly paid, and stressful experience that can last in excess of six years. Despite knowing this, graduate students accept these conditions because they truly love their work and the research they conduct. Looking at all of the scientific advancements in the last twenty years—from the smartphone you’re probably reading this article on to the wireless transactions you use to buy your morning coffee—it’s clear the country has benefited from their passion. Let’s make sure they can afford to continue to contribute to society and pursue the work they love. Please contact your local state representatives in addition to your hometown representatives in other parts of the country to voice your opinion on this matter.