December 21, 2023

ASAS Statement on Taxation of Graduate Student Tuition Waivers

The ASAS Board of Directors has issued the following statement on taxation of graduate student tuition waivers.

ASAS encourages its members to communicate with their Senators and Representatives to preserve the tax exemption for graduate student tuition waivers.

Champaign, IL (November 28, 2017) — The American Society of Animal Science (ASAS) would like to update the membership considering the potential link between tax reform and creating new tax liabilities for graduate students.

The House of Representatives November 16, 2017 version of the Tax Cuts and Job Acts (HR 1) would tax graduate tuition waivers related to teaching or research stipends. This version has passed the House, but the Senate version of the bill leaves “free tuition” exempt from taxation.

Specifically, the House version of the Tax Cuts and Job Acts removes section 117(d) of the Internal Revenue code, which exempts qualified tuition waivers from taxation. Put in academic terms, repeal of section 117(d) increases tax liability for graduate students receiving tuition waivers linked to specific research or teaching responsibilities. Several studies suggest that this change will lead to an almost $10,000 tax bill for graduate students receiving tuition waivers in association with research or teaching stipends, creating a financial hardship for graduate students.

This news created an instant uproar from student and university groups, expressing doubts that graduate students could support such a heavy tax burden. In response, the government has tried to remind the public that neither the House nor the Senate version remove tax code section 117(a). Tax code: section 117(a) provides that scholarships used to pay tuition and fees are not considered taxable income. Although this provision could be used by universities to provide tuition waivers to graduate students that are not taxable, it limits the work that the university can require of the student in return for tuition waiver. At first glance, it seems like section 117 (a) allows universities to continue providing tuition waivers that are not taxed; however, removal of the requirement of students to teach and/or do research in exchange for tuition waivers changes the very basis of how we educate the next generation of scientists.

As noted in a statement from the Federation of American Societies for Experimental Biology (FASEB), “providing tuition remission allows universities and colleges to reduce the cost of graduate education for students who teach or conduct research as part of their training. According to the Department of Education, 57 percent of tuition waivers were directed to graduate students in science, technology, engineering, and math programs. Ensuring that the U.S. will be able to continue to attract and retain the most talented people in science careers is essential to creating a dynamic and thriving scientific enterprise and growing our economy.” This sentiment is particularly true for scholarship in animal agriculture, which remains underfunded. Any action that creates financial hardships for students pursuing a graduate education adds an additional threat that erodes U.S. leadership in agriculture.

In a recent editorial, Congressman Flores (R-TX) pointed out that the impact of HB 1 on graduate students needs to be addressed, stating, “While the House-passed Tax Cuts and Jobs Act is overwhelmingly positive, there remains one important provision that should be addressed: preserving the way that waived and discounted tuition for graduate students is treated for income tax purposes. At this time, the Senate’s tax reform bill continues to allow preferable provisions for the treatment of graduate student tuition. Robust graduate education programs are economic engines for America, and as tax reform continues to move through Congress, I am working with my House and Senate colleagues to help protect tax relief for graduate students in the final House-Senate conference tax bill.” Senate leaders are working to get their version of tax reform legislation considered on the Senate floor during the week of November 27th.

ASAS encourages its members to communicate with their Senators and Representatives to preserve the tax exemption for graduate student tuition waivers.

Links below describe the situation further:

From the Chronicle of Higher Education:

From the National Council of Graduate Schools:

From Forbes:

Congressman Flores:


In order to understand and comment on the situation further, we suggest members contact their Senators.