WASHINGTON — As a Ph.D. student studying chemical engineering at LSU, Daniel Willis earns a roughly $25,000 stipend from the university to cover his living costs as he pursues research into using sunlight to disinfect water.
But under a provision in the GOP tax bill passed by the U.S. House of Representatives, Willis' income for federal tax purposes would balloon to about $61,000. The amount he pays into the federal treasury, Willis said, would jump from about $1,500 to $6,500, eating far into what's already a tight budget.
That's because the nominal value of the $36,000 tuition waiver Willis gets from LSU — few if any full-time Ph.D. students pay tuition — would be considered taxable income under the House-passed plan.
For Willis, who moved from Texas to study and do research at LSU, the waived tuition would more than double his pay — but only as far as the IRS is concerned. The tuition money never hits his bank account and is simply waived by the university.
"If this would go through, I’d have to choose between going into debt and staying in graduate school," Willis said.
The House passed the bill last week on a mostly party-line vote, with 227 Republicans backing the bill and every Democrat and 13 Republicans voting against it. A separate GOP tax plan is currently going through revisions in the U.S. Senate.
Drafts of the Senate bill, including the most recent version, wouldn't make tuition waivers taxable. House and Senate Republicans will likely hammer out differences in negotiations before bringing a compromise bill up for a final vote.
Other graduate students, both at LSU and other Louisiana universities, expressed similar worries about the potential hit in interviews this week. Each said the possible tax hike from counting their tuition waivers as income — something that could more than quadruple tax bills — would bust budgets already stretched extremely tight.
Leaders in higher education are also concerned. Universities — especially large public institutions like LSU — rely heavily on graduate students to teach undergraduate courses and grade student work in large lectures, something that's particularly true in the humanities and social sciences.
In fields like engineering, medicine and the hard sciences, professors and faculty researchers depend on graduate students to run labs, conduct experiments and carry out ambitious research. Those efforts can bring in major grant money from foundations or industry and lead to valuable new technology or techniques.
Fewer graduate students, Willis said, means fewer projects undertaken by labs and institutes. It could also result in higher costs for undergraduate students as universities hire more teachers to replace graduate teaching assistants.
"This has the potential to ripple across the entire foundation of higher education," Willis said.
Aaron Harrington, who like Willis is pursuing a Ph.D. in chemical engineering at LSU, said some graduate students at the Baton Rouge university make just under $12,000 per year. A handful of Ph.D. students with sought-after and relatively lucrative scholarships can earn as much as $35,000, said Harrington, the president of the university's Graduate Student Association.
Most earn somewhere in the upper teens or low 20s, Harrington said, and are expected to work full time at the university without outside jobs.
Harrington said he's spoken with a number of other students who've said they'd consider quitting graduate school or heading to universities abroad if the proposed tax change goes through. Others would take on mounting debt to finish.
At Tulane University and other high-priced private institutions, the hit could be worse. That's because the nominal value of tuition — which gets waived for nearly all graduate students — comes in at $50,920 for the current year, said Mary Clark, a political science professor and the associate dean of academic affairs at Tulane University's School of Liberal Arts.
Stipends for graduate students at Tulane, meanwhile, tend to pay between about $19,000 and $22,000 per year, Clark said. Insurance for a student without a spouse or children costs $1,300, while fees — which, unlike tuition, aren't waived for graduate students — come in at $2,200 at Tulane.
That means budgets are already tight for most, Clark said, with many already relying on loans to cover living expenses. Saddle those students with the federal tax liability of someone earning $70,000 per year, she said, and ends no longer meet for many.
"We’re feeling quite sure that would just decimate our graduate program," Clark said.
Cody Kent, who's studying competition for food among migratory birds at Tulane's Department of Ecology and Evolutionary Biology, said the tax change would suddenly knock him and his wife up several tax brackets — and cut his $21,000-per-year stipend roughly in half.
"Simply stated, there is no way to survive in New Orleans on $10,000 a year without government assistance (which we would not be eligible for)," Kent, 26, wrote in an email.
Kent said he sought out Tulane University because he was drawn to his current adviser's research work. Because nearly all Ph.D. students in the sciences have their tuition waived, the school's nominal price tag never entered into his thinking — until now.
"We are not young, rich children whose wealthy parents are paying for the extra schooling and fancy degree," Kent added. "All of us are fully independent from our families, most of us are in our late 20s or early 30s (at 26, I am one of the younger Ph.D. students), many of us are married (including myself), and some of us either have children or are planning to have children in the near future."
Graduate students in different disciplines would likely feel the blow differently. Harrington said potentially lucrative job prospects for engineering or science Ph.D.s in private industry might make taking on loans feasible for some.
In the humanities and social sciences, on the other hand, a bleak academic job market and relatively low teaching salaries make towering loans a potentially crippling financial burden for freshly minted Ph.D.s.
"You’re not training in a field (...) where the main rationale of going into that field is to make a lot of money," said Clark, the Tulane University political science professor, of her graduate students in the liberal arts. "You’re pretty much guaranteed to not make a lot of money. Most of these people have a real love of the discipline and will become teachers."
International students, Clark and others noted, would also be affected in unique ways. Student visas for foreign graduate students don't allow them to work outside the university on the side or over breaks, while spouses usually can't work at all.
American universities currently draw top talent from around the globe because of strong reputations for research and attractive funding. But both graduate students and university leaders have expressed worry that tax changes could alter the math — and send promising young American academics and researchers out of the country.
"This kind of action could also have the unintended consequence of driving graduate students out of the United States and toward colleges and universities in Canada, Europe and around the rest of the world," LSU President F. King Alexander wrote in an op-ed for the Baton Rouge Business Report.
King mentioned the bill's potential blow to graduate students along with a raft of other potentially detrimental changes in the House tax bill for universities, including shifts in how large foundation gifts are treated and the elimination of a deduction for interest on student loans.
A spokeswoman for House Majority Whip Steve Scalise, a Jefferson Parish Republican and vocal champion of the tax bill, said the plan will "close many loopholes and deductions in order to both simplify the tax code and lower tax rates for everyone."
Lauren Fine, the Scalise spokeswoman, said graduate students would see lower statutory tax rates under the bill and also benefit from doubling of the standard deduction.
"We are closely monitoring these provisions in the bill as it moves through the Senate and will be working with them to address any concerns moving forward," Fine said.
Paul Sawyer, chief of staff to U.S. Rep. Garret Graves, R-Baton Rouge, also said graduate students and others with low incomes would benefit from some of the changes in the bill. Sawyer also added that economic growth — which GOP lawmakers contend will follow the tax cuts and revisions — would create a stronger job market for those coming out of graduate school.
But Sawyer also said Graves spoke with House Ways and Means Chairman Kevin Brady several times about his concerns with the hit graduate students would take under the bill.
"Based upon their discussions, the implications on modest-income grad students appear to largely be an unintended consequence of the bill," Sawyer said. "Congressman Graves is working with Brady to work toward a favorable solution as the House negotiates tax policy differences with the Senate in the coming weeks."
Willis said he and other graduate students at LSU worked the phones hard in the days before last Thursday's House vote on the bill, hoping to lobby Graves and other Louisiana members of Congress to oppose the bill or change those provisions.
"I feel it’s deplorable, pushing through a bill that’s not good enough and ignoring their constituents on very particular action items," Willis said.
Michaela Stone is a 41-year-old single mother working toward her Ph.D. in math education at LSU, where she's focusing on developing ways to better teach blind or visually impaired schoolchildren.
Stone's stipend as a research assistant pays $12,528 per year, which she must tap to pay for LSU's rising student fees and the cost of subsidized university health insurance, which together cost nearly $4,000. Rent for the two-bedroom student apartment she shares with her teenage son comes out to $700 per month, leaving little for groceries or other expenses.
Stone said she currently pays just under $1,000 in federal income tax. But add the $13,000 of in-state tuition that's waived to her taxable income and that figure would more than triple — though Stone noted that, as a parent, she can also claim other deductions most of her colleagues can't.
"Every penny counts, everything is budgeted," Stone said. "I lost my car in the flood last year — there’s no way I can imagine replacing a vehicle right now."
Stone said she's already taking out loans to pay her bills while completing her degree — and feels so emotionally invested in her work that she'd continue even if the proposed tax changes go through.
"But there will be plenty of other graduate students who won't be able to make ends meet," Stone said. "More tragically, there will be countless potential students who never even start a graduate program of study because it has become too much of a burden to even consider."