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Tuition, retirement benefits questioned
June 20, 1997
A new tax package approved last week by the U.S. House of Representatives' Ways and Means Committee could dramatically affect the financial futures of University students, staff, and faculty.
The bill would phase out sub-section 117(d) of the federal tax code. This subsection provides tax-exemptions for tuition waivers given to graduate students who are working as teaching assistants or research assistants. At UConn, these students typically receive a salary of $13,000 plus a tuition waiver of $5,118 for in-state students and $13,298 for out-of-state students. However, under the new government plan, the waiver amount would be counted as income. As a result in-state and out-of-state students would be taxed at the cumulative rates of waivers and salary; that is, on $18,118 and $26,298 per year respectively. This change in the tax code could potentially affect approximately 1,500 graduate students at the Storrs campus and at the Health Center.
"This is a detriment to graduate students and faculty and, frankly, I think it can pose significant limitations to recruiting down the road," says Ed Marth, president of AAUP. "We are actively lobbying Congress against this move, but it's important for other voices to be heard."
Taxing tuition also will affect other University employees who receive reductions for tuition through the University for themselves or dependent children.
In addition, the government is hoping to tax the future income of anyone enrolled in TIAA-CREF (Teachers Insurance and Annuity Association-College Retirement Equity Fund). Though this fund has been exempted from taxation, the new measure would eliminate its tax-exempt status beginning January 1, 1998, creating a 3 to 5 percent reduction in benefits, according to TIAA-CREF sources.
"The 40 percent of UCPEA members who are covered by TIAA-CREF should call their senators and congressional representatives immediately and urge the elimination of this provision from the bill," says John Hammond, an UCPEA area representative and former chair of the Protect Our Pension Committee.
The bill containing these changes has not yet been voted on by the full House.