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Getting a Ph.D.? The House tax reform bill could be your worst nightmare.


Matt Grobis is working toward his Ph.D. in biology from Princeton. Like many Ph.D. students, he receives a stipend to help pay for his living expenses and his tuition is waived in exchange for teaching classes and doing research for the school.

"I definitely treat it more like a job when I go in. I either teach or I’m just working on experiments, analyzing data writing it up to submit to journals for publication," said Grobis, 27.

Under current law, Grobis's stipend is taxed, but the free tuition is not. That could all change if the House's tax reform bill becomes law.

The House Tax Cuts and Jobs Act would make free-tuition students like Grobis receive part of their taxable income.

"This pool of money, that I essentially never see -- the only proof that it actually exists is a line on my financial disclosure every month -- that money would suddenly become taxable," Grobis said.

Even with new deductions in the tax bill, Grobis said his taxes would increase by roughly $10,000. That's because he would be taxed as if he were earning nearly $80,000 for his tuition and stipend, even though he only sees a $34,000 stipend.

"I'm currently planning for a wedding and starting to think about the next steps in my career and my life," Grobis said. "I would not be able to afford to be a Ph.D. student if the House version of the tax bill goes through."

Grobis received an email from Princeton warning him and other students about the possible change in the tax code and urging them to call lawmakers.

"This is a matter of great concern to us and to universities throughout the country, although the precise impact of the proposal as drafted -- both generally and specifically at Princeton -- is still being assessed," the email from Cole M. Crittenden, Princeton's acting dean of the graduate school, and Deborah Prentice, the school's provost, said.

"In our view," the letter continued, "the government ought to be encouraging students from all backgrounds to pursue graduate education, not imposing new financial hurdles through changes in the tax code."

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Members of the House Ways and Means Committee, which drafted the tax bill, debated the tuition provision during a four-day markup of the legislation, but as of now the provision remains in the bill.

In a statement to Circa, a spokeswoman for the committee said the Tax Cuts and Jobs Act would ultimately help graduate students by creating more jobs for them once they earn their degrees.

"Graduate students, like all Americans, will be taxed at lower, simpler rates based on the compensation they receive -- not based on the maze of costly deductions and exclusions Americans must navigate today," she said.

But even some Republicans who support the tax plan say they would prefer to see the tuition provision removed.

"Personally I wish that was not in the bill," Rep. Chuck Fleischmann (R-TN) said.

Fleischmann, who has been a vocal supporter of the GOP tax plan, said the overall bill was a step in the right direction but added, "Is this the absolute ideal bill that I would have drafted? Perhaps not, and there are some provisions in there that I would like to see changed. That is actually one of them."

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Grobis said that if the tuition provision becomes law, it could contribute to inequality in the job market by discouraging people with less financial means from pursuing higher education.

"It would make pursuing a Ph.D. so unprofitable in the first place, that I know for some of my colleagues it would kind of be the last straw," he said.

In addition to repealing the so-called "tuition waiver," both the House and Senate tax reform bills would tax endowments students receive from universities for research.

The tuition provision is only in the House tax bill, not the Senate version. The House is expected to vote on the legislation on Thursday and the Senate is hurdling toward a vote by the end of the year. If both chambers pass their own tax bills, then lawmakers will hold a legislative conference to decide how to merge the two bills.

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