
Universities are also to blame for the GOP’s ‘grad student tax’ - stablemap
https://www.washingtonpost.com/news/posteverything/wp/2017/11/29/universities-are-also-to-blame-for-the-gops-grad-student-tax/
======
seibelj
My wife is graduating from a PhD program and all her friends spam social media
with "Republicans making my taxes go up!" posts.

News Flash - universities claim they pay _way_ more than a grad student's
stipend, then get some sort of tax break by "gifting" the tuition. So if
tuition is $50k, and pay a $30k stipend, total compensation is $80k - even
though a student only gets $30k salary!

Why doesn't the university just say the tuition awarded to grad students is
$100k? $500k? $1million? Who cares? It doesn't really exist anyway!

In reality, they should "award" grad students $0 in tuition and pay them like
what they are - employees (and deeply exploited employees at that!).

EDIT - Sure, PhD students _might_ cost more than they are paid (although I
seriously doubt it given the 80 hour weeks, classes taught, and metric ton of
bullshit my wife put up with). Regardless, pretending that somehow my wife is
being paid $80k and the university is doing her this big favor is a
ridiculous. Universities should figure out how to fund the supposed costs some
other way than through a giant, made-up tuition bill that's waived.
Universities are full of the smartest people on earth, _surely_ they can
figure out how to give grants properly without this insane accounting
maneuver.

~~~
mattkrause
We've beaten this to death in other threads, but that's not how it (often)
works.

Grad students usually don't pay the tuition themselves, but someone often
does. In the sciences, this often comes in the form of training grants from
the NIH or NSF at the beginning of grad school, followed by individual grants
to the student (e.g., NRSA) or advisor later on. Some people also get funded
by private foundations.

These funders aren't going to pay $1M per student, but they might very well
pay $40k. So...the university sets tuition at $40k, takes that money when it
can, and waives it when it no one else will cover it. Clearly, some kind of
funding is required to put on courses, organize seminar series, and things
like that.

None of this is to deny that academia is broken in many ways, but it's not
broken in the way you are claiming.

~~~
xyzzyz
>Clearly, some kind of funding is required to put on courses, organize seminar
series, and things like that.

Other countries manage to do all of those with a fraction of the cost of US
universities. Courses should be paid for by undergraduate students tuition,
grad students attend only a handful of courses throughout their studies.
Universities already take “overhead” money from the NIH or NSF grants, the
“tuition waiver” is just another way to get even more “overhead” than they
would otherwise be able to justify.

The real problem here is the cost disease, the fact that US schools spend
much, much more than schools in other countries, for no apparent reason.

~~~
throwawayjava
The US actually does reasonably well in certain sectors -- many non-flagship
state schools provide a decent undergraduate education at approximately the
same cost as German universities.

The in-state tuition at Missouri State University is $7,306 (yearly!), which
is actually cheaper than the typical German education. Portland State is
$9,030. I choose those because Missouri and Oregon subsidize less than other
states, so tuition is closer to true spend, and I'm too lazy to calculate true
spend.

Germany's excellent mid-range public transit and relatively dense population
makes a big difference in terms of _total_ cost (including room and board),
since many more Germans can live at home during university. But those things
are more attributable to infrastructure and especially geography than cost
disease.

(The case of elite private universities is pathological. Call it whatever you
want, they're just charging what they know they're worth. But they're also
extremely atypical -- the US has _A LOT_ of universities, and they have
different sets of problems. Central Western Flyover State University does not
suffer from the same problems as the Ivy League)

~~~
vilmosi
>>> The in-state tuition at Missouri State University is $7,306 (yearly!),
which is actually cheaper than the typical German education

No it's not. $7k+ is not a "deal", it's outrageous.

~~~
throwawayjava
_> No it's not_

"the average cost of an undergraduate degree in Germany is $32,000, PAID FOR
BY THE STATE" [1] (emphasis mine)

7306 x 4 = $29,224 < $32,000.

Math!

Notice I put some caveats in my original post -- US states do spend _some_
money per pupil in high ed, but those numbers are relatively small and rapidly
shrinking. Tracking state cash to specific schools is pretty hard, I wasn't
able to do it, so instead I just chose states known for relatively low per
pupil higher ed spending.

It is possible that the schools I mentioned are more expensive than
universities in Germany. But not by much.

Also. Parent claimed that education in the US is expensive in absolute terms,
insinuating waste. No one is disputing that students in the US have to pay a
lot for their education. But I am disputing the common myth that all colleges
in the US are absurdly expensive -- in absolute terms -- compared to
universities in other countries.

[1] [https://www.marketplace.org/2015/03/31/education/learning-
cu...](https://www.marketplace.org/2015/03/31/education/learning-curve/how-
german-higher-education-controls-costs)

------
betterunix2
University accounting is like Hollywood accounting; mostly it is just a game
that is played on paper to circumvent the spirit of various other rules. I
seriously doubt the tax plan will collect anything from grad student tuition
wavers, because universities have various alternatives to move the money
around without forcing students to pay unaffordable taxes. The only real
purpose of PhD tuition is to raid grants coming in to engineering and science
departments to pay stipends for humanities students, and there is no shortage
of creative ways to raid grants.

------
rdtsc
> It’s not the norm for PhD students to pay any tuition.

Ok if it's not the norm, why go through the charade? Just make the tuition $0

EDIT: Ah, found it in article - because they think IRS will charge them
anyway. Well, ok, let IRS then charge them and see what happens.

> As the university bulletin explains, “for a standard [research assistant]
> appointment in addition to the salary, the grant pays half of the tuition.

Yap happened to me. Got a grant and a large part of it evaporated because it
went to pay for my "tuition". Well there we go. Everyone is upset at the
government, why aren't they upset at the universities.

Let's check Yale's (the article talks about it) endowment for 2017. $27.2B -
nice. How about they use that to pay a higher stipend to students instead of
$30k for lab work, how about pay them $100k. And maybe Universities should
stop skimming so much off of grants that are often coming from government
labs.

But of course it is easier and more fun to get the grad students to sit on the
floor and yell "Look what Trump just did to us!". Makes for better news at
least.

~~~
psychometry
Endowments are not slush funds. They're supposed to last forever and you can't
just withdraw money whenever you feel like it. There are other savings to be
made in administrative overhead that could cover higher salaries without
touching the endowments.

~~~
rdtsc
> Endowments are not slush funds.

I didn't say they are.

> They're supposed to last forever and you can't just withdraw money whenever
> you feel like it.

They are controlled by a board and no you can't just tie them to a corporate
credit card and swipe it left and right. And some endowments are restricted
based on the donors' requirements (a common one is "use this for one
particular sport").

However using endowments to pay for tuition is also not unheard of. That's
what fellowships or tuition endowments are.

The bottom line a university with those kind of resources can find a way to
pay students a bit more. They are not innocent victims attacked by the evil
government which is how the issue has been presented in the media. This
article explains things in more detail and is more balanced, that's why it
kind of stood out.

------
theptip
I asked a friend who recently completed a PhD about this, and he was pretty
scathing about the UC system; he gave the same explanation as the OP.

TLDR: the reason the universities do this fake tuition fee plus rebate
combination is basically money laundering; their grant money can be spent on
paying for students, but not on capex like building new campuses. So by
artificially inflating their top-line tuition fee spend, and then clawing most
of it back in the form of a rebate, they are able to repurpose grant money for
other expenses.

The problem with this situation is that it's actually not in the universities'
interests to help grad students; their best play is to let grad students get
ground into the dust a bit more and then point at how awful the Trump
administration is, knowing that the Republicans will get the blame. In a
sense, the worse it goes for students, the better, as it increases the
likelihood of a concession that enables the universities to continue their
money laundering. However hard it is to be a grad student in the US, there's
still a lot of competition for each one of those low-paying grad student
spots, so even if demand for those jobs goes down a lot, the seats will still
be filled.

~~~
dragonwriter
> However hard it is to be a grad student in the US, there's still a lot of
> competition for each one of those low-paying grad student spots, so even if
> demand for those jobs goes down a lot, the seats will still be filled.

Yes, but grad students aren't fungible commodities; if the best grad students
with the best choices don't want to go to US schools, it will impact the
quality of research, the ability to attract top talent at other levels, the
ability to attract funding, and the ability to generate value through research
(patents, etc.), as well as the quality of graduates and their future income
potential, which affects things like likely future growth of endowments.

Your analysis of the Universities’ interest is correct, in terms of financial
interest, only in the shortest possible term, which might be key for the kind
of for-profit public firms that live and die by the next quarterly report, but
most universities aren't like that.

~~~
theptip
> most universities aren't like that.

I hope you are right, but I'm not so sure. We'll see I suppose.

~~~
dragonwriter
The structural incentives are different, as they are mostly private or state-
established quasi-private nonprofits; they don't answer to shareholders who
buy and sell continuously and especially based on quarterly reports.

------
Exo_Tartarus
I worked in the administration of a flagship state university. Instead of
spending millions of dollars on salaries for bogus administrative positions
like 'Senior Vice President of Strategic Initiatives', put that money towards
grad student salaries and bringing down general tuition.

~~~
B1FF_PSUVM
That's not how you win friends and influence people, to coin a phrase ...

------
pdog
After reading through the article, it sounds like the tax treatment and
accounting for PhD students is a mess. If anything, the new tax bill
simplifies it.

~~~
maxerickson
The problem is that it simplifies it abruptly, for no good reason and in a way
that will be more directly problematic for students than for the giant
institutions they work for.

~~~
angersock
Then maybe they should strike.

Remember strikes?

~~~
landonxjames
Striking works when your employer is the one instituting harmful policies. In
this case I don't think it would help the students at all.

~~~
angersock
Institutions skimming sometimes up to half of grants is basically theft and
using grad students as super-cheap skilled labor is exploitation.

This should be the straw that breaks the camel's back.

------
ams6110
TLDR: _They could still change course in a way that would moot the tax bill:
They could recognize that graduate student workers add value and stop charging
tuition._

And that's what they'll do, assuming the changes are passed into law. They'll
find some other line item in the grant or overhead calculation to cover that
expense. It's all a shell game, which is why I believe that the tax code
should be vastly simplified. It's too easy to navigate around any individual
provision, if you can afford to pay someone who knows how (and universities
can).

~~~
mattkrause
The thing is that most of this money is coming for the feds already, so the
net result of all this will be close to zero (except for screwing over a bunch
of people who are already in pretty precarious situations).

------
chasil
There is an easy solution to this problem.

Go to Germany.

[http://www.bbc.com/news/magazine-32821678](http://www.bbc.com/news/magazine-32821678)

Were I young and starting college again, I would be gone.

~~~
sanderjd
This is the important point - the US has spent the whole year handicapping
itself in the competition for global talent. The effects of this will be felt
in a decade, and nobody will remember where we went wrong.

~~~
weberc2
The US academic system has been growing increasingly dysfunctional for a
decade; this year is just more of the same.

------
gnicholas
> _Although at Yale University, we actually bring in incomes around $30,000
> per year, we’d be taxed like people who make $70,000. The hole this would
> blow in the individual finances of graduate students would make advanced
> research impossible for many. I could wind up with $11,014 — more than a
> third of my actual take-home pay — going to taxes. This would mean I’d owe
> four times my current tax bill._

I'm surprised that someone making 30k would pay any income taxes, TBH. I'm not
sure where the $11k number comes from, but I'd be curious to see how it would
be that high with the larger standard deduction that the tax bill proposes.
Not saying it's wrong; just saying there's no support provided and it seems a
bit high. Note: I am a (former) tax lawyer.

~~~
mattkrause
I worked it out
here[[https://news.ycombinator.com/item?id=15625353](https://news.ycombinator.com/item?id=15625353)]
for the current tax regime.

Yale's tuition is actually a bit more than $40k; they quote $47600 for this
year.

I believe the GOP plan replaces the current standard deduction ($6350) and
personal exemption ($4050) with a $12,000 standard deduction, but the first
$90k are taxed at 12%, instead of including 10% and 15% brackets.

So...12% of ($30,000 stipend + 47,600 tuition - 12,000 deduction) is $7872.
Connecticut (where Yale is) also has an income tax that's 3% of the first
$10,000; 5% of the next $40,000, and 5.5% of the amount between 50k and 100k.
Assuming tuition is also subject to state tax, it works out to 10000 * 0.03 +
40000 _0.05 + 27600_ 0.055 = $3,818.

That works out to a total of $11,690 from take-home pay of $30,000. Ouch.

~~~
gnicholas
Thanks for taking the time to do the math. It would be interesting to see if
various states put "adjustments" in place to back out the tuition from income,
for state law purposes. In the event that this goes through at the federal
level, I would imagine several states (CA, NY, MA) would do this in a
heartbeat.

------
ejstronge
> It would be preposterous to bill us for this — akin to asking medical
> residents to pay the hospital for the right to train there.

Interestingly, this historically was the case, and continues to be the case
for some residencies in the United States. This provides support _for_
assessing tuition as opposed to treating students like employees.

------
graeme
Will this also affect scholarships at the undergrad level? i.e. need based aid
or merit scholarhips?

Law school as well has a lot of these. The articles focus on grad students, so
it hasn't been clear if tuition rebates at other levels are affected.

------
rapjr9
Maybe the entire purpose of this tax change is to kill both research and the
universities? The GOP seems to generally be opposed to both. Make it
impossible for the grad students to survive, that means less grad students so
less research gets done, and the university gets less research funding and
less royalties from patents. Seems like a clever indirect way to kill two
birds with one stone, like something a politician would think of.

------
Overtonwindow
What is also missed is how much universities are dependent upon international
graduate students because they pay the most. Then when those students demand
GTA's the universities dream up new, costly classes, labs, and recitations,
for no credit, which are not necessary to graduate, but are forced upon the
undergraduates and go towards padding the GTA budget.

------
kapauldo
Hard to sympathize with a blue blooded yalie.

------
s73ver_
Nobody but the GOP is to blame for what's in the GOP's bill.

------
tabeth
I've edited my post to better illustrate my opinion.

I don't have any opinion on whether or not PhD students are employees or not,
however, what I do want is consistency. So if PhD students are indeed
students, yet receive a massive tax break in the form of "free tuition"
(contrast this to imaginary undergraduate working for a college, who receives
income from the college from a job and has to pay post-tax income for tuition)
then undergraduates should have the same benefit (that is, tuition reduction
from pre-tax income, if they work for the school that they go to).

That's it.

~~~
beisner
Ph.D. students, in the sciences and engineering at least, spend the majority
of their time doing research that benefits the university. Much like
professors, they have teaching obligations, make research contributions, and
generally work to advance their field. While they are labeled students, the
day-to-day life of a Ph.D. student looks more like an employee than a
customer. This is why there’s been a push to unionize, and why even charging
tuition in the first place is suspect.

~~~
tabeth
Indeed. If it looks like an employee they should be paid like an employee.

