In the email, Garber discussed how various measures in both the Senate and House version of the bill could affect students and staff at Harvard. Several measures in the House bill, in particular, could affect how the University supports its students.
Passed on Nov. 16, the House bill ends the tax reduction for interest on student loans and consolidates credits for higher education expenses. It also repeals the tax-exempt status of the “qualified tuition reduction”—tuition lowered by a university for its employees and paid graduate students.
Harvard currently practices this type of tuition reduction, giving out roughly $45,000 per year to each graduate student, though that amount drops to roughly $12,000 after the first two years of a Ph.D program.
If the bill becomes a law, these tuition grants could be counted along with graduate students’ stipends as taxable income, a change which would push students into a higher tax bracket.
The Senate will soon vote on the new tax plan. While the Senate Finance Committee has approved the House’s measures, the Senate version of the bill does not currently designate tuition reductions as taxable income.
Garber wrote that, if students’ tuition assistance is counted as taxable income, students would pay a significant portion of their income as taxes.
“The resulting tax burden would be grossly disproportionate to the stipends received by most students,” he wrote.
The Republican plans would also make the University’s endowment taxable, which Garber sharply criticized.
“In both the House and Senate, the tax bills include an unprecedented tax on the net investment income of the University, including the endowment,” Garber wrote. “Under current proposals, we estimate that the cost to Harvard next year would be $43 million.”
Harvard affiliates, ranging from University President Drew G. Faust to Harvard’s student unionization effort, are decrying the bill and urging Congress not to make it law. Garber wrote that Faust spent several days in Washington this month lobbying lawmakers about the legislation.
Harvard Graduate Student Union-United Auto Workers, the University’s student unionization effort, organized a phone bank on Nov. 10 to lobby against the proposal. The union plans to hold a rally on Wednesday. Afterwards, HGSU-UAW will hold a phone bank to call members of Congress.
A message on the union’s Facebook page says the tax plan includes a “giant tax hike on graduate students.”
“The bill would double or even triple many students’ taxes, making graduate school an unaffordable proposition except for those already independently wealthy,” it reads.
Garber wrote he and other administrators are still deciding how to respond if the Senate passes the bill.
“In the meantime, we are monitoring this legislation closely and considering how to move forward should this bill become law,” he wrote.
—Staff writer Caroline S. Engelmayer can be reached at email@example.com. Follow her on Twitter @cengelmayer13.
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