I usually avoid talking politics on this blog. In part, that’s because I usually don’t have something worth saying.
When the US House of Representatives voted on a tax bill that included a tax on grad student tuition waivers, though, I was tempted. Grad school wasn’t so long ago for me, and combining my friends’ experiences with mine I thought I knew enough for a post.
I still had questions, though. So I asked around, and tried to learn more.
In the end, the tax on tuition waivers was dropped from the bill. I’m not going to comment on the rest of the bill, I really don’t have any relevant expertise there.
I do want to say a bit about what I learned, though.
First, the basics:
In the US, PhD students don’t typically pay tuition. Instead, they get paid a stipend, which gets taxed just like any other income. In exchange, they work for their department at the university, as Teaching Assistants and Research Assistants.
PhD tuition isn’t zero, though. Their tuition (often comparable to undergraduate tuition at the same university) is waived, but someone still pays it. Sometimes that “someone” is the department, paying tuition alongside wages as part of the cost of a Teaching Assistant. Sometimes it’s a grant held by a professor, as part of the cost of that professor hiring a Research Assistant. Sometimes it’s another organization: the National Science Foundation or the Fulbright Program, paying for a student who showed their worth in an application process.
My first question, then, was this: what determines PhD student tuition?
I know a fair number of professors, many of whom have worked with university administrations, so I thought this would be simple to answer. Then I started asking people, and everyone I asked said something different.
Some thought it was mostly set by comparing to other universities. Others had the impression it was tied to undergrad tuition, that the university had a standard price it charges per course. Others pointed out that at many places, the cost of funding a grad student is the same as the cost of a postdoc. Since postdoc salaries are at least somewhat competitive, this implies that the total of grad student tuition plus stipend is set by the postdoc market, and then the university takes as much of it for tuition as they can before the stipend becomes unreasonably low.
What no one claimed, even after I asked them directly, was that grad student tuition represented the cost of educating a grad student. Grad education does cost money, in professor salaries and campus resources. But I couldn’t find anyone who would claim that this cost was anywhere near what universities charged in PhD tuition.
Rather, grad tuition seems to be part of the bulk of mysterious “overhead” that universities take out of grants. “Overhead” varies from grant to grant and situation to situation, with universities taking less out of some places and more out of others. Either way, it isn’t really overhead in the conventional sense: rather than being the cost to the university of administering that grant or educating that grad student, it’s treated as a source of money for the university to funnel elsewhere, to fund everything else they do.
If grad tuition waivers had ended up taxed, couldn’t universities just pay their grad students’ tuition some other way?
Yes, but you probably wouldn’t like it.
Waiving tuition is only one way to let grad students go tuition-free. Another way, which would not have been taxed under the proposed bill, is scholarships.
There are already some US universities that cover grad student tuition with scholarships, and I get the impression it’s a common setup in Canada. But from what I’ve seen, it doesn’t work very well.
The problem, as far as I can tell, is that once a university decides that something is a “scholarship”, it wants to pay it like a scholarship. For some reason, this appears to mean randomly, over the course of the year, rather than at the beginning of the year. This isn’t a huge problem when it’s just tuition, since usually universities are sensible enough to wait until you’ve gotten your scholarship to charge you. But often, universities that are already covering tuition with a scholarship will cover a significant chunk of stipend with it too.
The end result, as I’ve seen happen in several places, is that students show up and are told they’ll be paid a particular stipend. They sign rental contracts, they make plans assuming that money will be there. And then several months pass, and it turns out most of the stipend they were promised is a “scholarship”, and that scholarship won’t actually be paid until the university feels like it. So for the first few months, those students have to hope they have forgiving landlords, because it’s not like they can get the university to pay them on time just because they said they were going to.
Of course, I should mention that even without scholarships, there are universities that pay their students late, which leads into my overall point: this system is a huge mess. Grad students are in a weird in-between place, treated like employees part of the time and students part of the time, with the actual rationale in each case frustratingly opaque. In some places, with attentive departments or savvy grad student unions, the mess gets kept to a minimum. Others aren’t so lucky. What’s worse is that this kind of system is often the sort where, if you put it under any pressure, it shuffles the problem around until it ends up with someone who can’t complain. And chances are, that person is a grad student.
I don’t know how to fix this. It seems like the sort of thing where you have to just reform the system all in one go, in a way that takes everything into account. I don’t know of any proposed plans that do that.
One final note: I usually have a ban on politics in the comments. That would be more than a little hypocritical to enforce here. I’d still like to prevent the more vicious arguments, to keep the discussion civil and informative. As such, the following rules are intended as conversational speed bumps, with the hope that in writing around them you take a bit more time to think about what you have to say.
For the comments here, please: do not mention specific politicians, political parties, or ideologies. Please avoid personal insults, especially towards your fellow commenters. Please try to avoid speculation about peoples’ motives, and focus as much as possible on specifics: specific experiences you’ve had, specific rules and regulations, specific administrative practices, specific economic studies. If at all possible, try to inform, not just vent, and maybe we can learn something from each other.
Interesting thoughts. I know you said you didn’t have a solution, but since posting, have you had any thoughts on how to fix this mess?
Oh goodness, I have no idea…
I’ve been thinking about if there’s something useful I can say here. One thing I was reminded over the holidays (and that ohwilleke alludes to in his comment) is that graduate courses are generally more expensive per student than undergrad courses, just owing to smaller class sizes. This doesn’t apply once a grad student stops taking courses and does research full-time, though, and many schools charge the same tuition then.
My naive instinct is that this is the kind of issue where you just need to get all the stakeholders in a room together and have everyone state their position and explain what they need. But I do get that this is naive, and overall I don’t have the background to have useful proposals here.
One of the fundamental issues you have to address to determine the cost of providing graduate education is how much of a university’s overall costs are allocated to teaching, and how much is allocated to research. Another tricky part of that the basic university business model involves departments providing lots of tuition generating “service courses” like intro calc and intro chemistry and intro physics in high volumes at low cost per student in order to finance low student-teacher ratio classes from the highest cost providers to upper division undergraduate majors and graduate students. And, then there is the question of how to allocate lump sum institutional funding from state legislators to state universities and from endowments to particular costs. Transparency is the enemy of higher scholarship which doesn’t fully cover its costs with tuition or consumer purchases of scholarship but is necessary to the ongoing conduct of the discipline and the progress of basic science research.
while you were asking questions, did you get an answer to the question “if tuition had been waived, how would universities recoup the lost overhead?” or was this just passed over in silence?
Sorry, you mean if it was waived in general, so not even paid by grants/TA funding? I don’t think anyone is considering that, since teaching grad students does cost something even if it isn’t really the cost of grad tuition. If you just mean reducing tuition to the cost of teaching a grad student, yeah, universities would have to find another source of funding to cover the kinds of things they cover with overhead. At least some of it is probably worth covering, so the question becomes whether there’s a better, perhaps more direct way to fund those things. And yeah, I haven’t heard any good proposals for that.
Without the explicit provision that exists in current law and is apparently unchanged in the new plan, the “fair market value” of any “waived” graduate school tuition would have to be declared by the student as taxable income, just like any other gift one receives. So the rub is: what is the “fair market value” of graduate education? Some might argue that it is negative 😉