For graduate students at the University of Hawaii Manoa, being able to live and study in a place as expensive as the Aloha State often depends on family support, loans and tuition waivers in exchange for teaching or research on a stipend.
But in the wake of a federal tax plan recently passed by House Republicans — which will be reconciled with a Senate Republican version passed early Saturday in Washington — the already precarious financial situation faced by many graduate students could take a turn for the worse.
Of 4,700 UH graduate students, about a quarter, or 1,247 students, receive what’s known as a “tuition tax waiver” under the current U.S. tax code. Their waived tuition is not taxable, only the stipend they draw as teaching or research assistants.
Under the proposed House GOP tax plan, students’ waived tuition also would be taxed, significantly increasing their tax exposure. Yearly tuition for an out-of-state UH graduate student is $36,768. Average pay for an 11-month graduate or research assistant is $22,944. Rather than being taxed at $22,944, the student would be taxed at $59,712, a 160 percent increase, according to numbers provided by Krystyna S. Aune, UH’s dean of graduate education.
Those 1,247 UH graduate students currently receiving a tuition tax waiver would see their tax liability increase by $1,000 to $3,000. Considering the length of many of their degree programs, this could force a premature exit from their studies, some told Civil Beat.
What’s more, 60 percent of UH waiver recipients are non-residents, meaning they face even greater tax burdens due to their higher tuition.
“When it was first revealed in the House version, it honestly came as a total gut shock,” said Tom Iwanicki, a second-year UH zoology PhD student. “You go through thinking tax cuts, you don’t really expect an administration to go after economic drivers like grad students, particularly those of us in sciences.”
“It sent quite a chilling effect through the department,” Iwanicki said.
Nationally, about 145,000 graduate students could be affected. The provision is among several in the GOP tax plan seen as unfavorable to higher education, including ending a student loan interest deduction, taxing investment earnings by endowments at certain private institutions and disincentivizing charitable giving.
“The whole tax bill is an affront to higher education.” — Tom Iwanicki, UH graduate student
While the Senate tax overhaul bill — passed by a 51-49 vote — does not include the provision repealing the tuition tax waiver, it could still make its way into a final tax bill that would go to President Donald Trump for his signature.
The prospect of that sends shudders through UH’s grad school community.
The mood among colleagues is “very pessimistic” and “very scared,” said second-year master’s student Taylor Lewis, president of UH Manoa’s Graduate Student Organization.
“It’s very demoralizing for those interested and passionate about learning and education to see it be punished at a national level,” she said. “Especially in Hawaii, where a lot of non-traditional students come back to school and want to (pursue) education to make greater change.”
Lewis, whose research covers Hawaiian language immersion programs in local schools, said if the House GOP tax plan becomes law, she would have serious doubts about continuing on to a PhD program. The Maryland native, whose out-of-state UH tuition is $37,000, earns a $17,500 stipend.
Her taxable income would rise to more than $50,000 under the GOP tax proposal.
“Having that tax liability for at least four, possibly seven, years is just not feasible for me on a graduate assistant income,” she said.
Iwanicki said his taxable income would rise to more than $45,000 in his current situation, making his tax liability increase by about $3,000.
The Canadian citizen said he would seriously consider moving back to Canada with his wife or pursuing the rest of his education in Europe if it came to that.
“Especially in Hawaii, where we’re already severely strained, the average grad student is one tragedy away from insolvency,” he said. “We’re living paycheck to paycheck and we’re providing essential services to the university.”
The ripple effect of the tuition tax waiver repeal could be devastating to higher learning and its benefits on American competitiveness overall, wrote a Harvard–MIT Program of Health Sciences and Technology PhD student in a recent New York Times op-ed column.
At UH Manoa, which already faces declining graduate student enrollment, the number could drop further. Students forced to abandon graduate studies will lead to a higher ed “brain drain,” and undergraduate classes taught by many of these graduate assistants could similarly suffer, said Iwanicki.
It could also lead to lowered productivity among UH grad students who “will have to work harder off campus just to make ends meet on campus,” he said.
“The whole tax bill is an affront to higher education,” he said.
In an email to graduate students sent Friday, UH President David Lassner said he had met “face-to-face” with all four members of Hawaii’s congressional delegation and expressed his concern about the tax plan.
He encouraged UH students to “reach out directly and immediately” to their own congressional representatives.
“Sharing your own personal stories of impact will be most effective,” Lassner said.
“A lot of people are just anxiously waiting to see what happens,” said UH Manoa master’s student Timothy Zhu.
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