November 28, 2017

Yale decries tax bill's potential cost to grad students

Yale University | Michael Marsland
Yale University | Michael Marsland
Yale University is opposing the proposed GOP tax bill, saying it would unfairly burden graduate students.

A federal proposal to tax graduate school tuition waivers would impose "a terrible burden" on Yale University doctoral students, school spokesman Tom Conroy said in an interview with New Haven Biz.

The proposal is included in the tax reform bill approved earlier this month by the U.S. House of Representatives. Conroy also raised objections to parts of the bill that would tax Yale's endowment and end the deduction for student loan interest. The school is actively opposing all three provisions, he said.

"American higher education, both public and private, is the envy of the world," Conroy said. "It's a tremendous asset to the country. Congress ought to be working to enhance and promote higher education and should not be using these tax changes to enable other tax cuts."

New Haven Mayor Toni N. Harp joined Conroy in opposing the bill and expressed dismay over its potential impact on Yale, a key part of the city's economy, and higher education.

"Proposed federal tax changes that would adversely impact graduate students and universities run contrary to what should be wholesale American investment in higher education and workforce development," Harp said.

AshLee Strong, spokeswoman for Speaker of the House Paul D. Ryan, R-Wisc., did not return a call from New Haven Biz seeking comment.

Yale and other institutions of higher learning routinely waive the tuition of PhD students in exchange for teaching classes and doing research. Under the House bill, the value of that tuition – $41,000 at Yale – would be taxed, drastically increasing the amount PhD students owe the government.

The fact-checking organization Snopes estimated that the legislation would more than triple a typical computer science graduate student's federal tax bill to $10,209 a year.

"This would be a terrible burden on these students, and we would strongly oppose any legislation that would include that," Conroy said.

Conroy also raised objections to a part of the bill that would impose a 1.4 percent tax on investment earnings from college and university endowments equaling $250,000 per full-time student. He noted that Yale's endowment is the school's biggest single source of revenue, accounting for about a third of its annual budget. Tuition, by contrast, makes up only about 9 percent of the budget.

Money taken from the endowment means fewer funds for education, financial aid and other programs, Conroy said. He noted the nation has many tax-exempt nonprofits like Yale and questioned the fairness of singling out one small sliver of them for taxation.

"Among the many thousands of nonprofits that support all sorts of missions and all sorts of purposes, you would only be taxing one small segment of them," Conroy said. "There's a significant fairness (issue) that you would single out one charity over another."

Conroy said the provision repealing the deduction for student loan interest would have less impact on Yale because the school tries to assure all its undergraduates graduate debt-free. He said that the school nonetheless opposes the proposal.

The Senate version of the tax reform bill, which has yet to be voted on, would not impose the tuition waiver tax or withdraw student loan interest deduction, but would tax large university endowments like Yale's.

Writing on behalf of dozens of higher education organizations, the American Council on Education expressed "grave concerns" about the bill's impact on colleges, universities and students in a Nov. 6 letter to House Ways and Means Committee leaders.

"This legislation, taken in its entirety, would discourage participation in postsecondary education, make college more expensive for those who do enroll and undermine the financial stability of public and private, two-year and four-year colleges and universities," the letter said. "This is not in America's national interest."

Christopher Hoffman can be reached at

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