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Graduate students worried about new tax reform plan

Graduate students worried about new tax reform plan
Posted at 7:12 AM, Nov 21, 2017
and last updated 2017-11-21 07:12:23-05

The $1.5 trillion tax cut plan the house passed last week isn't a tax cut for everyone.

Michigan State University has sent a letter to graduate students warning them about the tax reform plan. That warning has Masters and PhD candidates worried about how they're going to afford to pay higher taxes when they don't make very much money.

"People are panicking basically", said Sarah Bijani.

And she is dealing with a lot of them. Sarah is the President of the MSU Graduate Employees Union and she's trying to answer their questions about a proposal to tax their tuition forgiveness as income.

"It has the potential to absolutely devastate across the country and what graduate education looks like", said Bijani.

Basically, if graduate students get $30,000 in tuition forgiven because they're teaching classes, the IRS would tax that money.A graduate or PhD student making $20,000 in salary would now be taxed as if they're getting paid $50,000.

"I'm being punished for bettering myself and you're taking the opportunity away from us", said MSU Graduate Student, Amanda Reyes.

Amanda is one of those students. She's working on her Masters and is wondering if it would even be worth pursuing a Doctorate at that price.

"Its scary to be honest..you know i'm going to have the spend the rest of my life paying this off", said Reyes.

Republicans, like Congressman Mike Bishop, say there will have to be trade offs to pay for the tax cuts, and that it will benefit all students over time.

"If you look at it as a whole..and how it applies to each and everyone of them. If you focus in on one deduction..one credit..You'll be disappointed", said Congressman Bishop.

MSU and other universities are worried that taxing tuition forgiveness will cause many grad students to drop out.That could force professors to leave if they get pulled away from their research to teach more classes.

The bill also eliminates the "Lifelong Learning Tax Credit", which currently allows graduate students to deduct education expenses. The Senate is working on its own tax reform bill. It is not know if that version will include taxing tuition forgiveness.