By Tina Shaygan, November 22 2017 —
Many Canadians pursuing higher education take their studies south of the border in order to take advantage of funding or to attend schools that offer opportunities in niche areas of research. For many of these students, the tax plan proposed by the Republican party could be devastating, leaving them with only two options — rack up thousands of dollars in debt or drop out of school.
On Nov. 16, United States House Republicans passed legislation that could overhaul the American tax system, and it’s causing alarm for both U.S. schools and Canadian students looking to pursue higher education down south.
Now in the hands of the U.S. Senate, the tax-reform bill looks different than the legislation that passed through the House and leaves out some of the provisions impacting post-secondary institutions. However, there are still tremendous uncertainties surrounding the bill. If a version similar to the one passed by the House takes effect, Canadian students looking to pursue graduate or doctoral studies in the U.S. will be among those most impacted.
The House legislation aims for $1.5 trillion USD in tax cuts over a decade. To accommodate this, the legislation would end many individual tax breaks. The legislation also makes tuition waivers — rebates that graduate students receive from universities in exchange for taking on the roles of teaching and research assistants — taxable. In simpler terms, the legislation deems tuition waivers as taxable income, which would change students’ tax brackets to a much higher one and dramatically impact graduate students’ stipends. Additionally, student-loan interest would no longer be deductible under the House legislation.
Combined with the steep Canadian-U.S. dollar exchange rate, the impacts of the bill would devastate many professional and graduate students.
Photo by Mariah Wilson
Claire Gjertsen is a University of Calgary graduate who is currently pursuing her PhD at New York University. She said she chose to go to a U.S. school because of her interest in pursuing a PhD instead of a Masters of Arts. Additionally, she considered studying in the States more appealing due to funding options available to her.
“I didn’t feel that it was necessary to do an MA because I did a lot of research as an undergraduate so I was able to skip the masters degree by going to an American school,” she said.
Gjertsen added that a tuition waiver played a huge role in her ultimately deciding on an American school.
“When I got accepted into Canadian schools, I was offered a stipend to live on but I would have had to subtract my tuition amount from that stipend no matter where I went in Canada,” she said. “But in the States, I was offered a larger stipend and I didn’t have to pay any tuition.”
Gjertsen said that if she had known her financial options could be altered so dramatically, she would not have gone to an American school.
“I would have had to put a lot more into my consideration between Canadian and U.S. school because I was accepted into quite a few Canadian programs,” she said. “Ultimately, I made my American decision significantly based on funding.”
Dexter Fergie, a University of British Columbia graduate pursuing a PhD in history at Northwestern University in Evanston — just north of Chicago — has a similar story. Fergie specializes in U.S. and global history and said he chose Northwestern in part because of its history department’s welcoming reputation.
“The people [at Northwestern] are also working on such interesting and important projects that it was really hard to pass over,” Fergie said.
Fergie said his funding package includes a $31,780 stipend and a $56,000 tuition waiver. Under the Senate plan, however, Fergie’s taxable income would include the sum of his stipend and tuition waiver, resulting in him having $87,780 of taxable income from his funding alone. That would put him at a tax rate of 15.6 per cent when his actual yearly income is $31,780. Fergie’s net stipend amount left for the year would be just $18,087.
Fergie also said he would not have gone to a U.S. school for his PhD if he had known this could be his financial situation.
“If something like one of the current plans gets passed, I will have no choice but to drop out of my program and try to transfer to a Canadian university,” he said. “I make enough to live my life here in Chicago right now, but I just simply would not be able to afford to remain. The PhD can be a slog, but this just adds so many uncertainties.”
Northwestern University is among many U.S. schools troubled by the tax proposal. In an internal email to graduate students, their dean of Graduate Studies and associate provost for graduate education, Teresa K. Woodruff, called the legislation “mean-spirited.”
“The proposed tax on graduate student tuition makes no sense,” the email read. “Republican House leaders have either been misinformed about the nature of tuition or are simply mean-spirited and want to punish students.”
Internal emails from New York University echoed the same concerns as Northwestern.
“Few of the proposals that have emerged in the tax discussions are as short-sighted as this one,” an email from NYU read. “Doctoral programs are inextricably intertwined with research and with the future of higher education. Measures that would make the pursuit of a PhD less affordable endanger the strength of the U.S. research enterprise, our innovation economy and the succeeding generations of university faculty. It threatens to turn a system that has long been based on merit into a pursuit available only to the well-off.”
Both Northwestern University and NYU called the House legislation an attack on higher education.
“The proposal erroneously infers that tuition is an ‘income’ — it is not,” Woodruff’s email read. “It is the means by which education is paid leading to our future lawyers, scientists, entrepreneurs, artists and journalists. By punishing the nation’s graduate student population, the Republican proposal is taxing us all and the lost income will be measured in lost intellectual capital for generations to come.”
“I can assure you that combatting these elements of the bill — on our own, with peer institutions and through higher education associations — is receiving our highest attention and effort,” NYU’s email read. “We are encouraged that the counterpart Senate bill, which was unveiled this week, does not include this provision. However, that is all the more reason to remain focused on removing it from the House bill, as Congress will be seeking to reconcile the various versions. We will not rest.”
Gjertsen said the uncertainties surrounding the tax plan has caused her difficulty at an already stressful time in her studies.
“This has definitely added to my stress,” she said. “Not to mention, the [U.S. President Donald] Trump government adds stress every single day.”
She added that from the early stages of the House legislation, she has been involved in trying to raise awareness of the issue.
“I signed a letter to my New York representative pretty much the first day this bill dropped and I heard about it to say, ‘Please do not pass this,’ ” Gjertsen said.
Fergie said that he thinks though universities are troubled by the tax plan, action from students and their unions is needed to stop these changes.
“It’ll take mass action from students themselves,” he said. “It’s times like these where we really need the power that comes with being in a union.”
U of C history professor Jewel Spangler said she has advised many students over the years in their pursuit of education in the U.S. but now the prospect of an education south of the border seems too uncertain for many to follow.
Spangler said students may choose U.S. schools for different reasons, including combined programs or supervisors.
“There are lots of places in the U.S. that have multiple graduate programs all in driving distance within each other, something that very few Canadian cities can offer,” she said.
She added that competition in the job market for specialized programs is also another factor of why attending a U.S. school is more beneficial for some students and they could be impacted if tax plans make tuition waivers taxable.
“Because I’m an American-history specialist, the students I’m advising, staying in Canada limits their choices of graduate programs severely,” Spangler said. “There are only a handful of programs that have a real depth in American history in all of Canada. And it also limits their opportunities in terms of employment. They would be strong contenders in the Canadian market, which is pretty small but they would have a tougher time competing more broadly.”
With a specialization in American history, Spangler said U.S. schools allow graduates to dig deeper in their research. The tax plan could devastate students in programs like hers.
“It could end a lot of people’s careers because people don’t have the capacity to pay that kind of tax bill nor can they acquire that kind of debt, nor should they have to,” she said.
Spangler added that for now, she still advises her students to still apply to U.S. schools but to not commit to anything until further considerations.
“Do not accept an offer of admission without getting real clarification on exactly what provisions in place deal with the possibility that the tuition waiver could be taxed,” she said. “In other words, students should request information about whether the school has a defence fund in place to help students or if they would be willing to fund the taxes levied. Don’t accept an offer that is impossible to fund.”
The Tax Plan would cost NW grads $15k on a less than $30k stipend, making staying impossible for many first gen grads. #GradstudentTax @RonJohnsonWI @SenRonJohnson @JeffFlake @BobCorker @jameslankford @SenatorCollins @lisamurkowski @NorthwesternGW pic.twitter.com/AH5RKud3GM
— NU Graduate Workers (@NorthwesternGW) November 21, 2017
At Northwestern University, graduate students are looking to unionize in order to make their voices heard. Zachary Angulo, another PhD student at Northwestern University who has been involved with the Northwestern University Graduate Workers (NUGW) since its inception in Fall 2016, said he thinks a union is the only way to advocate for students on all matters, including the tax plan.
“Graduate employees perform essential work for Northwestern University and deserve a seat at the table when decisions are made that affect their lives, their students and the community,” Angulo said.
Angulo added that the House tax legislation is troubling because it collects taxes on income students never “see.” He said that NUGW has been researching the matter more closely.
“NUGW intends to provide some guidance through our research to the rest of Northwestern’s graduate worker community so that they are more aware of how this tax plan may affect them,” he said.
Angulo added that NUGW is working on events, informal meetings to provide guidance to students and assistance for students to contact their government representatives.
Fergie added that the tax overhaul is only part of larger changes happening in the U.S. under the Trump administration that will trouble many students.
“I mean, U.S. Immigration and Customs Enforcement has ramped up deportations, the U.S. Environmental Protection Agency and State Department are being dismantled, the Pentagon is gaining more power to act independently, and Obamacare is being targeted,” he said. “None of this began with Trump but it is on a quantitatively different scale.”
The future remains uncertain as the bill moves through the Senate. Fergie said the uncertainty is troubling.
“The chances of the tax plan becoming law are slim, but if the last couple years of improbable events — Trump’s election, Brexit, etc. — are evidence of anything, it is not beyond the realm of possibility,” he said. “So, however incompetent the GOP is and unpopular the tax plan is, it is not comforting to depend on their incompetence and internal discord to save us from the passing of this bill.”
Angulo said unions and movements across the country give graduate students their best chance.
“Graduate workers are graduate workers, whether they are from the U.S. or elsewhere. NUGW, and a great many other unionization efforts across the U.S. recognize this and are fighting for international students’ place at the table as well,” he said. “All graduate workers are welcome to join the cause and I think it is in their best interest to do so.”
The U.S. Senate is expected to make a decision on the tax plan in early December.