How Much Will The House Tax Plan Cost Grad Students?

5:51 minutes

Tax legislation is making its way through Congress, with the House passing one tax plan in mid-November, and the Senate moving rapidly towards a vote on its own plan. The House tax bill contains a provision that would make certain forms of university tuition waivers count as taxable income—and that has many U.S. graduate students, who make little actual money but often receive large tuition waivers, concerned.

[Hard cider makes for easy sipping.]

Kathy Shield and Vetri Velan, two graduate students at the University of California Berkeley, developed an online calculator that allows grad students to estimate the effects of the House tax plan on their pocketbooks.

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Segment Guests

Kathy Shield

Kathy Shield is a Graduate Student in Nuclear Engineering at UC Berkeley in Berkeley, California.

Segment Transcript

IRA FLATOW: Elsewhere in Washington, tax legislation is moving through Congress, with the Senate possibly moving to a vote on their version of a tax bill– even as we speak, perhaps some time today. The House passed their tax bill earlier in mid-November. House Republicans say their bill will simplify the tax code, but one group of taxpayers could find their tax obligations dramatically increasing under that plan, and talking about graduate students. Joining me to talk about the House tax plan and it’s a tax plan– its effects on grad students, is Kathy Shield. She is a grad student herself in nuclear engineering at UC Berkeley. And she’s one of the students behind an online calculator that grad students can use to run the numbers on the House plan. Welcome to the program.

KATHY SHIELD: Thank you.

IRA FLATOW: So you have an app for that– to run the numbers to see what your increase in taxes. Let’s back up a bit and say why will grad students be seeing an increase in taxes.

KATHY SHIELD: Well, it comes down to a change in the language in terms of how our tuition exemptions are going to be considered under taxes. So right now, most graduate students get their tuition paid on their behalf by their department or by their research advisor. And right now, that money, which is money we never see, is not taxed, but under the House plan, that’s going to change. And we’re going to get taxed on the tuition money that we never see that never goes into our pocket.

IRA FLATOW: And how much of an increase are we talking about?

KATHY SHIELD: Well, for some students, it could be thousands of dollars because we get– like for example, I have a $35,000 a year stipend and my university’s tuition is $17,000 a year. So I would be taxed on an additional almost $20,000. At private universities across the country where tuition is significantly more, some students are going to see their effective taxable income more than doubled.

IRA FLATOW: So to be clear, this language is in the House version of the bill, but not the Senate version.


IRA FLATOW: Is there any hope of the senators saying, let’s get rid of this?

KATHY SHIELD: Well, right now, it’s not in the Senate version, and there have been some senators, including Ted Cruz, for example, who have indicated that they don’t want to see this impact on grad students in the final language of the bill. Next, what happens, after the Senate passes their language, then both the House and the Senate language go into committee and they’ll have to figure out how to reconcile the differences. So at this point, we are hoping as graduate students that first, the language stays out of the Senate bill that gets passed, and then second, that it doesn’t get into the final language.

IRA FLATOW: This is Science Friday from PRI, Public Radio International. Talking with second year grad student Kathy Shield. OK, let’s talk about your online calculator. We have a link for it up on our website. How do you use it and how deep did you have to dig into tax law to draw that up?

KATHY SHIELD: Yeah, so to use it, it just asks a few simple questions about the stipend that you receive as a graduate student, the tuition at your university, and then a few questions about some other quirks of how you get paid, whether you pay your health insurance, are you on a fellowship, things like that. And for figuring out how to actually put the calculator together, a colleague of mine– she’s the one who’s in the physics department here at UC Berkeley– he and I looked through the language that currently exists in tax law and the language in the House tax bill to figure out how changes are going to be made.

IRA FLATOW: How did it get started, this project?

KATHY SHIELD: Well, when we first heard about the fact that it seems like a really minor change. It’s just one clause in one part of the tax code. When we saw that it included impacts on graduate students, Vetri just kind of pulled this math together. He said, I want to know what the impact is going to be on me. And then what happened from there, we wanted to turn into a tool that would be useful for other students to be able to figure out what their personal impacts would be. And so we made this simple calculator.

IRA FLATOW: So what are students going to do if they actually have to pay this extra tax? They have to take a loan out or?

KATHY SHIELD: Yeah, it really depends on the student. So I’ve talked to students who are anticipating needing to take loans out. I’ve talked to students who are from other countries, who are saying, I’m just going to go back to my home country and maybe finish my education there. Unfortunately, the impact is going to be hardest on students that are from lower socioeconomic statuses because they’re going to have a harder time getting loans if that’s what they need to do or finding other options and other opportunities.

IRA FLATOW: Do you think this has changed your career a bit for you, where you’d like to be headed?

KATHY SHIELD: For me personally, I don’t think it will change my career. This conversation has solidified my commitment to making sure that scientists are engaged in the policy-making process because it’s a really important thing to keep in mind that science should be included in the conversations. And this is a really clear example of what happens if we don’t talk about science.

IRA FLATOW: Hmm, so you have started the conversation with your folks, yeah?


IRA FLATOW: Well, thank you very much for explaining it to us and being a guest today. Kathy Shield, grad student in nuclear engineering, of all things, at UC Berkeley. And you’ll find a link to the online tax calculator on our website at sciencefriday.com. Thanks again.

KATHY SHIELD: Thank you.

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