New Bill Will Increase Taxes On Graduate Students By Almost 300 Percent

Brain drain. Prasit Rodphan/Shutterstock

The wildly unpopular House GOP Tax Reform plan recently passed, and another version of it is currently being debated in the Senate. While there’s plenty for policy wonks up and down the land to digest, the part that caught our attention related to graduate students and how much more tax they’ll have to pay if the bill becomes law.

As first pointed out by two analyses being circulated at Carnegie Mellon and the University of California Berkeley, PhD students could now be taxed almost 300 percent more than they already are. The annual stipend for doctoral researchers is already incredibly low, so to change the tax code to make this worse is rightly seen as reprehensible.

In short, it’ll put more people off entering academia. Plenty of these people will be STEM researchers, which are absolutely vital to the well-being of American society.

So how does the bill ensure this?


At present, PhD researchers get an annual stipend, which is basically like a salary. They’re almost always insubstantial; enough to get by, generally speaking. At the same time, they have to pay tuition fees, which can be covered by the university.

That stipend is taxable income, which means that the student must pay tax on it. The tuition fees, however, are not. This GOP House bill, however, makes that tuition fee taxable income, despite the fact that the fee isn’t used in any direct way by the student.

This means that someone with a stipend of $30,000 will suddenly find themselves having to pay tax on an $80,000 sum. This generally amounts to a yearly tax debt of around $10,000, something which plenty of PhD students couldn’t even dream of affording.

If you are a science student at Carnegie Mellon, for example, your taxes will rise from $2,384 per year to $9,459 per year – an increase of 297 percent.

Additionally, the bill also nixes something called the student loan interest deduction. This allows those earning up to $80,000 to deduct $2,500 in student loan interest paid, which as of 2015 helped 12 million people pay for their student loans. Now, it's set to disappear.

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