College is expensive. Books, housing, transportation, and increasingly, tuition.
In fact, tuition and fees at top national private universities have significantly outpaced inflation. Without adjusting for inflation, the tuition rates jumped 157 percent in 20 years, and 194 percent at public institutions. At the top of the list, in-state tuition fees have climbed the most, at 237 percent.
In fact, 46 states spent less per student in 2015-2016 than they did before the 2008 recession, according to a study by the Center on Budget and Policy Priorities. With public funding decreasing, tuition for state colleges and universities is rising, eliminating access for an increasing amount of students.
“I think it’s more of a mindset than an attack on any one element in particular,” said DePaul professor of sociology Michael Bennett, who focuses specifically on economic and social policy.
Last November’s “Tax Cuts and Jobs Act of 2017” tax reform bill would have negatively impacted these costs for graduate students and faculty at national universities.
Among widely controversial aspects of the bill, such as its long-term effect on the middle class and corporate tax cuts, arose a provision that was met with outcry from students and educators: new taxes in the world of higher education. More specifically, taxes on non-monetary benefits for those who are employed by institutions of higher education, such as tuition waivers and discounts.
It would have played out like this: take a graduate student who is attending a program with a price of $50,000 a year. This same graduate student is receiving a tuition waiver from the university that is valued at $30,000 in exchange for teaching a certain amount of undergraduate classes a week. Under current legislation, this student’s taxable income is $30,000, which they pay in addition to the remaining $20,000 of their tuition. But, had this original provision passed (it was removed in the final Senate version), the student’s taxable income would be $80,000 — the value of the tuition in addition to the “non-monetary” value of the waiver.
This would have effectively priced out many of current and prospective students from attending graduate school. The tax hike also would have created similar situations for faculty members who receive tuition waivers for their children to attend school or any other benefits from institutions of higher learning that aren’t cash bonuses.
“I’m what DePaul calls a Double-Demon. I did my undergrad at DePaul, and then you can continue your masters here and they discount tuition significantly,” said graduate student Isabella Jorgensen, who is studying journalism and media and cinema studies. Jorgensen’s reaction to the proposed bill last November was like that of many other graduate students in this country: shock, confusion and anxiety.
“I’m hoping to go on to get my PhD, so I kind of freaked out when I heard about the tax bill coming out,” she said. “It would have made getting the rest of my master’s degree difficult. DePaul has a program where as a master’s student, if you agree to be a teacher’s assistant, you’re paid with a stipend. So that would be on top of what I get as a Double-Demon, so pretty much if that would have been taxed I would be paying so much more for my masters…it would have been horrible for me.”
Although the provision was removed, questions still remain as to why these taxes were conceived in the first place. For some, the answer lies in an examination of who the bill affects.
“I think the way we have to think about policy generally is who pays and who benefits from specific aspects of the policy,” said Bennett. “There are so many aspects of income that aren’t included in the calculation of who is poor, middle class, working class…this argument and approach to policy you can see in so many other realms. Not just education. I don’t think it’s an attack on education, per se.”
Bennett cited the current administration’s support for a work requirement for Medicaid as another example of an approach to policy that limits access to shared benefits.
The bill included deep federal cuts to Medicaid by repealing the former federal mandate, under Obamacare, that individuals must have health insurance. Obamacare allocated federal funding for this mandate, but the Tax Cuts and Jobs Act of 2017 cut this funding significantly. This means that states are responsible for covering this new lack of federal funds, which at first seems like a relatively simple economic maneuver — where funding is lost, it must be replaced, and for most states this means raising taxes in some area.
But even a simple raise in taxes is made more difficult by the fact that the tax bill also eliminated a deduction for state and local taxes. This means that wealthier residents can no longer deduct state and local taxes from their tax bills, or that the deductions will be capped significantly lower than they are now. So, these residents are now paying more. And although wealthier residents paying more in state and local taxes isn’t inherently a bad thing, in this case it makes it more difficult for local and state governments to pass any more tax hikes in the near future.
So states find themselves in quite the predicament: they must provide funding for healthcare, but will have trouble doing so by simply raising taxes. So where does the money come from?
Higher education has been the answer for some states.
But according to a representative from the office of U.S. Representative Peter Roskam (R-IL 6th District), who played a significant role in crafting the bill, the provision was not intended as an attack or to raise the price tag for students. The bill was to prevent what conservatives saw as universities using stipends and tuition discounts to avoid paying higher wages to graduate students, and an opportunity to create revenue from what is currently a source of millions of untaxed dollars.
The most egregious — but not entirely uncommon — example are tuition waivers and discounts for family members of university faculty. If, for example, a president of a university wants a certain professor to take a job at that institution, the president can offer their children all four years of college entirely free. Depending on the university, this is a non-monetary gift that can actually exceed $200,000 for each recipient.
“The question is, is that wage benefit?” the representative said. “Is that benefit that is of value and a taxable event, or is there a reason that we should be allowing this preference for schools? [We] think a lot of people look at that and think that’s kinda weird that it’s not taxed.”
However, the lines become more blurred when this provision boils down to the graduate student level. Think back to the earlier example about the graduate student receiving the $30,000 a year tuition waivers. Those who were behind the bill saw this as exploitation.
“The question then is asking, well, is that income?” said the representative. “And to a more specific point, should the university be allowed to forego paying someone a wage by instead giving them a benefit that does not cost the actual amount of this benefit. Is it right that Harvard can say, ‘Hey you, you’re gonna work for me for 30 hours a week and I’m gonna pay you nothing, but I’m gonna give you this thing that you value at $50,000 but I value at much less.’” Meaning that although the tuition waiver itself might have a price tag of $50,000, it really costs the university much less to waive that student’s tuition in exchange for the labor provided in 30 plus hours of work per week.
Each of DePaul’s graduate programs differ in the specific assistantships and/or stipends they offer to students in the programs, so it’s difficult to make generalizations as to how DePaul’s overall graduate enrollment might have been affected had the legislation passed.
DePaul University’s Office of Public Relations and Communications declined an interview for the time being, and said that “the situation is still too fluid to know what type of legislation is likely to succeed.”
Regardless of the intention of this provision, it still would have increased the already staggering tuition rates that bar many young people in the U.S. from achieving the education that they not only desire, but that is necessary in an economy that is quickly being transformed by new technology and innovations.
This was ultimately the reason that the provision was dropped in addition to constituent outcry, according to the representative. They also noted the fact that, under current tax law, university endowments are largely untaxed, along with scholarships.
“it’s pretty unheard of — the benefits we bestow on institutions of higher education,” said the representative. “This one was more narrowly tailored. It’s not the grad students that were really in mind on this one…we were trying to look at, are we offering an incentive for a college to not pay people. Is a college getting away with not paying someone?”
However, the intentions of the original bill and the ultimate decision to eliminate the provision in the final Senate version don’t negate the overall trends in opinion on higher education held by the Republican base.
In 2017, only 36 percent of Republicans in a Pew Research poll said that they thought colleges and universities had an overall positive effect on the country, down 18 percent from 2015. This coincides with data from the same Pew Research poll that found the 2016 election to have the widest educational divide in voters in recent history. Voters with a college degree or some higher education favored Clinton over Trump by 23 percent.
This is all despite the fact that a college degree is still the number one driving factor of wage growth. In a New York Times analysis of data from the Economic Policy Institute, it was found that in 2013 those with a college degree made 98 percent more than those without one per hour. That’s up from 89 percent in 2008, 85 percent in 1998 and 64 percent in the ‘80s.
The numbers tell a different story than the opinions that voters seem to hold, and the question still remains of what the future of higher education in this country will look like under the current administration. Already in 2018, the current administration has made additional attempts to push affordable higher education further out of reach. A budget proposal in February proposed eliminating the Public Service Loan Forgiveness, which would eliminate subsidized loans — something that 5.7 million students took out in the 2016-2017 school year.
Rhetoric from prominent Republican leaders also outlines clear partisan lines in regards to views on higher education.
Republican figures, such as Marco Rubio and Jeb Bush, have also made remarks suggesting that the federal government should not be involved in funding colleges or universities.
In the fray of tuition costs, tax jargon and partisan lines, it can be easy to lose sight of who policies and rhetoric like this end up impacting most: students, many of whom are already facing financial uphill battles.
“I continue to be nervous, and it’s all pretty scary,” Jorgensen said. “I hope that I’ll be able to make it through. My goal has always been to go straight through my undergrad, graduate and then Ph.D program. Now, I’m going to finish my masters and have to work before I can go back and complete my Ph.D. It’s not what I planned on, but like I said. I’m scared.”
Header image by Cody Corrall