A national organization of graduate students is hoping to get a bill passed early next year that would greatly reduce the taxability of graduate stipends, easing financial pressure on a group that often struggles to satisfy educational and living expenses with meager stipends.
Currently, portions of graduate stipends not directly paying for tuition and related fees are considered taxable, and graduate students lose around $200 a month to federal income taxes, according to the National Coalition of Graduate Students for an Affordable and Accessible Graduate Education.
The coalition is working with the National Association of Graduate and Professional Students to gain support for a bill making "cost of attendance" portion of stipends tax emempt.
The cost of attendance is defined in the Higher Education Act as room, board, transportation, computer purchase and similar expenditures.
For most graduate students, these expenses absorb all or almost all of the stipend, Alik Widge '99 said. Widge, currently a graduate student at Carnegie Mellon University, is a founder of the coalition and a legislative concerns coordinator at NAGPS.
The proposed bill will "bite into the problem of student debt significantly," Widge said. Graduate students accumulate an average of $60,000 in educational debt, according to the coalition.
"We want to let people study what they want to study rather than being limited by financial concerns," Widge said.
Removing the tax burden is a "fairly reasonable thing to do," Dartmouth Graduate Student Council member Chris Langmead said, adding, "There is no compelling reason to tax stipends."
According to the coalition, the effect of making stipends tax-free would be minimal, since doctoral students number fewer than 500,000 nationwide.
Taxing stipends is "silly," Dartmouth psychology graduate student O'Dhaniel Mullette-Gillman said.
The issue of whether graduate stipends are considered as scholarships or wages is a key question in the debate. Prior to 1986, the portion of stipends that covered the "cost of attendance" were considered scholarships and were tax-exempt, Widge said. Currently, all parts not applied to tuition are taxed as wages.
Associate Dean of Graduate Studies Gary Hutchins said that no students have approached him with difficulties caused by the taxation of their stipends, however.
Dartmouth's base stipend is $18,084 a year, which includes health care credit worth $987, Hutchins said. This stipend "gives us enough for a comfortable lifestyle," Mullette-Gillman said.
Langmead was unsure whether the taxes create actual hardship, but he acknowledged that, especially for married graduate students or for those with children, the taxes could make a significant difference.
