[Congressional Record Volume 143, Number 100 (Tuesday, July 15, 1997)]
[House]
[Pages H5190-H5191]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  STOP TAX HIKES ON GRADUATE STUDENTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 21, 1997, the gentleman from Massachusetts [Mr. McGovern] is 
recognized during morning hour debates for 5 minutes.
  Mr. McGOVERN. Mr. Speaker, a terrible miscarriage of justice is 
taking place in the House Republican tax bill, an attack on graduate 
university students across this country. At a time

[[Page H5191]]

when House Republicans are proposing that more than 50 percent of tax 
relief should benefit the wealthiest 2 percent of Americans, they have 
targeted graduate students for tax increases. This is absolutely 
outrageous, and it simply must be remedied.
  The House Republican tax bill eliminates section 117(d) of the Tax 
Code, a provision that excludes tuition from taxable income. What this 
means is simple: Graduate students who work as teaching assistants or 
research assistants to help pay their tuition currently get a tax break 
on that income. With the loss of this tuition tax break, many graduate 
students may actually see their taxes rise by thousands of dollars per 
year. The National Association of Graduate-Professional Students has 
indicated that many graduate students will see their take-home pay cut 
by 50 percent or more, and Federal and State income taxes increased by 
as much as 350 percent.
  Tuition waivers greatly benefit students struggling to finance 
postgraduate work. The vast majority of these students are studying to 
earn Ph.D.'s and masters degrees in academic disciplines. Many will go 
on to modestly paid, but important university positions, or will pursue 
careers in science and technology research.
  While in school, they work hard as teachers and researchers, and 
their pay is very meager. But because of their hard work and 
dedication, many of these students can take academic courses for free. 
Under the House Republican tax bill, the value of this education 
package would be considered taxable income.
  Many of these graduate students will be unable to continue their 
studies with the loss of the tuition tax waiver, endangering the 
educational future of America in the process.
  In June, the 500 graduate students at the Massachusetts Institute of 
Technology wrote me expressing their deep concern about this provision 
in the House-approved tax bill. They stated, and I quote:

       The tuition waiver granted by MIT for graduate teaching and 
     research assistants makes graduate school a financially 
     viable opportunity for us. If tuition is now redefined as 
     taxable income, many of us will no doubt be driven out of 
     graduate school and away from careers in research and 
     teaching.

  Mr. Speaker, at a time when Congress should be increasing the 
affordability of higher education for all Americans, the Republican 
House tax bill will shut out some of the best and brightest of our 
students from receiving advanced higher education. If America is to 
remain competitive in the 21st century, we need more students to become 
active in scientific research and development, not less. The House 
Republican tax bill seriously threatens national research efforts in 
medicine, national defense, product development, and technology.
  Graduate students are valuable assets of the academic and research 
communities. They should not be penalized for their hard work and 
sacrifice, and they certainly do not deserve to be taxed for their 
service to our Nation.
  But this is not the only attack on graduate students in the House 
Republican tax bill. Graduate students are also hurt by changes made to 
section 127 of the Tax Code. This provision allows workers to exclude 
from their income the first $5,250 of educational benefits paid by 
their employers. This tax exemption should be permanent for both 
graduate and undergraduate students. But the House Republican tax bill 
says no.
  More than 800,000 graduate and undergraduate students benefited from 
this provision in 1994, and those numbers have increased significantly 
over the past 3 years.
  Section 127 has been hailed by both the business and higher education 
communities as a low-cost measure that makes it possible for hundreds 
of thousands of workers to return to school while continuing to work 
full-time jobs. Companies use it to retrain workers who need improved 
skills, and employees use it to keep abreast of new information and 
technologies that would help make advances in their field.
  At a time when Congress has recognized that lifelong learning will 
keep the American work force competitive, the House Republican tax bill 
penalizes workers and businesses who are attempting to achieve this 
goal.
  Mr. Speaker, this is bad public policy; it is bad tax policy, and it 
is simply unfair. Republicans that give tax breaks to those who fly on 
corporate jets, but only by raising taxes on our hard-working graduate 
students. Republicans can cut taxes for those with large investment 
portfolios, but only by raising taxes on graduate students. Well, Mr. 
Speaker, I would rather invest in America's future by investing in our 
graduate students rather than raising taxes on their tuition.
  The House Republican tax bill also denies students from deducting the 
interest on their student loans, and it eliminates tuition waivers for 
the children of modestly paid academic faculty and staff. These 
provisions are antieducation, they are antifamily and undermine 
America's economic and competitive future. I urge my colleagues to 
lobby the budget conferees to reinstate section 117(d) and permanently 
extend section 127 to graduate as well as undergraduate students.
  Mr. Speaker, I submit for the Record a letter from 500 MIT graduate 
students on these issues.
                                           Massachusetts Institute


                                                of Technology,

                                     Cambridge, MA, June 27, 1997.
       Dear Congressman: We, 500 MIT graduate students, write to 
     express our great shock and disappointment regarding the 
     proposed elimination of Subsection 117(d) of the Internal 
     revenue code which excludes tuition from taxable income.
       A graduate teaching or research assistant who receives a 
     stipend of $1300/month and tuition waiver of $22,000/year 
     (excluding summer tuition) will expect to pay $650/month in 
     State and Federal taxes under the proposed new legislation. 
     For many students this is a 3.5 times increase in tax!
       The tuition waiver granted by MIT for graduate teaching and 
     research assistants makes graduate school a financially 
     viable opportunity for us. If tuition is now redefined as 
     taxable income, many of us will no doubt be driven out of 
     graduate school and away from careers in research and 
     teaching.
       The proposed changes in tax code will force universities to 
     dramatically increase teaching and research assistant 
     salaries to maintain a reasonable standard of living for 
     graduate students. In turn, this could increase tuition for 
     undergraduates and dramatically increase pressures on already 
     burdened federal research programs. The proposed elimination 
     of Subsection 117(d) is a dramatic step in the wrong 
     direction.
       The new provisions will make graduate school unaffordable 
     to millions of Americans throughout the next decade. We urge 
     you to represent our views in the Congress by working against 
     the new legislation which eliminates Subsection 117(d) of the 
     IRS code. We respectfully ask you to oppose this provision in 
     the House bill and to support provisions which are more 
     encouraging of graduate education. The future of our nation 
     requires it.
       We thank you for your cooperation.
           Sincerely,
                                          Graduate Students at the
     Massachusetts Institute of Technology.

                          ____________________