The presidents of the University of Florida and Florida State University said a last-minute decision by congressional leaders to scuttle a proposal to tax tuition waivers for graduate students would be a major victory for higher education.
A U.S. House tax-overhaul plan would have made graduate students pay federal income taxes on tuition charges that get waived in exchange for duties like research and teaching. The U.S. Senate did not include the provision in its tax legislation.
As the final negotiations unfolded this week on the tax bill, which is primarily aimed at cutting corporate and personal income taxes, federal lawmakers said the tax on graduate tuition waivers is not expected to be part of the legislation, according to The Wall Street Journal and other media outlets.
However, the exact details of the bill will not be known until Friday when a conference report is released.
Presidents from all 12 of Florida’s state universities had joined a national campaign by higher-education leaders urging Congress not to tax the tuition waivers.
“All the presidents in our system have raised their concerns,” Florida State President John Thrasher said. “We’ve met with congressmen. We have written letters. We have done everything we can to make sure that they understand the significance and impact it would have on higher education.”
Thrasher and University of Florida President Kent Fuchs, who met with Gov. Rick Scott on Wednesday, said the proposal to tax graduate tuition waivers was a top concern with the federal legislation.
“It’s important because our nation needs more students that get advanced degrees at the master’s and PhD level,” Fuchs said.
“Many of these students come in and need a stipend to survive on,” Fuchs said. “Many have families. They are living on $20,000. If you start taxing income they aren’t getting, it’s critical.”
In the 2011-2012 academic year, more than half — 55 percent — of graduate students nationally earned less than $20,000 a year, according to the U.S. Department of Education.
At the same time, master’s degree students received tuition waivers that averaged $10,949 nationally, while doctoral students had a $13,609 average waiver, according to the federal data.
About 57 percent of the waivers in 2011-2012 were for students enrolled in advanced-degree programs in science, technology, engineering and mathematics.
“A repeal of (the waiver) would lead to an unaffordable increase in taxable income and make the pursuit of a graduate degree much more challenging, if not impossible, for many of these students,” according to the Association of Public & Land Grant Universities, a national group that includes Florida’s top public research schools. “In turn, this would greatly damage our nation’s scientific research enterprise.”
Thrasher said financially supporting graduate students is important because of the role they play at each school.
“These are people who really do make a difference in the university,” Thrasher said. “They teach. They do research. They provide so many great services.”
If the tuition waiver is taxed, Thrasher said schools would have to look at other ways to keep graduate education affordable.
“We would have to subsidize it from the Legislature or other programs,” he said. “It would be a burden on everybody”