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UPDATE: Graduate Tuition and the Current U.S. Congress Tax Proposal

Please read the important update below regarding graduate tuition and the current U.S. Congress Tax Proposal:

On Thursday, November 16, the House of Representatives passed the Tax Cuts and Jobs Act, which contains several provisions that could impact higher education, the University community, and in particular graduate students at Penn State. As described in the message that was sent to all graduate assistants and graduate fellows on November 7, and further shared with members of Graduate Council, graduate programs, and the Advisory Committee for Graduate Education, this bill would, among many provisions, eliminate many student tax benefits, and tax employer-provided tuition assistance and graduate tuition grants-in-aid, according to Sec. 1204. Repeal of Qualified Scholarships, and in particular, Sec. 117(d) Repeal of the qualified tuition reduction and Sec. 117(d)(5) Special Rules for Teaching and Research Assistants.  Current law enables graduate students to exclude funds received for scholarships, fellowships and grants from taxable income if funds are used to pay tuition and fees, among other items. It is estimated that on average, graduate assistants and fellows at Penn State will have a $2,000 increase in their tax obligations as a result of the proposed changes, though individual students may be affected differently. The Senate has marked up its version of the bill, which does not include this tuition provision. The Senate is expected to vote on its tax reform proposal later this week. Should the Senate approve the bill, differences in the House and Senate versions will need to be reconciled.  

The American Council on Education (ACE), a higher education advocacy group to which the University belongs, has several resources available on their web site, including summaries of both the House and Senate Bills.  ACE’s Action Center also enables individuals to reach out to their Members of Congress (https://www2.acenet.edu/actioncenter/?vvsrc=%2fcampaigns%2f55189%2frespond) specifically regarding the education tax benefits.  The site will automatically direct the user to the appropriate members of the House and Senate based upon the user’s zip code, and there is a drafted message already included, but it can be modified or a unique message substituted.

Many in the University community have commented on the provisions that will harm research universities and our economic competitiveness, and in particular our graduate students, and it is critical that we let our opinions be known.  As of November 27, only 260 constituents residing in the Congressional District that includes Penn State University Park utilized the ACE Contact Congress tool for students. Each of you is urged to use the ACE’s Action Center site and let your opinion be known. 
 
As the legislative process continues, the Graduate School, the Office of Government and Community Relations, and University leadership will continue to advocate forcefully with Members of Congress on behalf of our graduate students, and will be constantly monitoring this situation, coordinating with national higher education organizations such as ACE, AAU, CGS, and APLU, and even working with the Penn State Alumni Association’s Grassroots Network to engage alumni for further advocacy, and will continue to communicate updates to members of the graduate education community as new information becomes available.  
 
This issue is the top priority for the Graduate School, the University's Office of Government and Community Relations staff and University leadership, but your individual voices need to be heard as well.  Please take the time to reach out to Members of Congress via the ACE Action Center today!

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