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I found this article to be quite hysterical (and I follow and enjoy Aaronson's blog). It fails to present (or even consider) that there is a reasonable justific

I found this article to be quite hysterical (and I follow and enjoy Aaronson's blog). It fails to present (or even consider) that there is a reasonable justification for these tax code changes, and instead leaps to "Trump and the Republicans must be evil and are out to crush all liberal edifices". An article recently posted here on HN gives a more nuanced explanation for what's going on: https://news.ycombinator.com/item?id=15807842 https://news.ycombinator.com/item?id=15807842 TL;DR, the tuition fee deferral scheme that universities currently use is a grant-money laundering scheme. It's used to take federal grant money that comes with strings attached (e.g. can only be spent on certain things like paying salaries for grad students, or research costs) and launder it into money that can be spent on whatever the university wants (e.g. building new campuses or paying for nice desks for administrators). It's probably not unreasonable for the federal government to try to close this loophole. The issue is that students are caught in the crossfire here, and I'm not sure that the incentives are there for universities to protect them fully. But to be clear, the universities could just stop billing the government false grad student salaries, and then grad students' take home pay and tax exposure would remain unchanged, and there would be no crisis. The problem is that then universities would have to find a new money laundering scheme, or would have to make structural changes to their budgets that they would prefer not to make.

dmix 9y ago
It's sad that there seems to be little internal critique coming from within universities of the complete takeover of schools by administrators. When it does happen it's almost entirely the result of some external rumblings or a direct affront like this being twisted. I guess it's because these same administrators ultimately control the narratives (and budgets, jobs, etc) coming from the schools, creating a self-protecting cycle which only generates more administrative power. So when attempts to curtail their power happen they can twist it to make it seem like it's an attack on teachers, students, and research - instead of the separate group of people who consume the greatest amount of resources within the school, who don't generate the positive research and economic utility for which universities are typically known. Which is a shame, because there are probably no better people to stand up for this than the professors and researchers. Plenty of research has shown these people and their work aren't responsible for the massive increase in tuition and costs associated with schools. Yet the problem is perpetually the amount of revenue and income the school can make, not how it's being used.
- chasil 9y ago
  U.S. university students who feel that they are getting a bad deal should go to Europe. http://www.bbc.com/news/magazine-32821678 http://www.bbc.com/news/magazine-32821678 Think twice about beginning a bachelor, masters, or doctoral degree in this country, as you will be crushed with debt. With a lot of work, I was able to graduate in '94 with an E.E. degree with a total student loan debt of $1,500. That is not possible here anymore, but it is possible in Europe. If I had to do it again, I would be gone.
  - rxhernandez 9y ago
    I was able to graduate with an EE degree, within the past five years and with no debt at Cal Poly (a university with one of the highest ROI on the west coast). <$7000/year is certainly doable if you're living at home with your parents.
    - chasil 9y ago
      To be honest, I spent a year living at home, but my college of engineering was 60 miles away. I lived near campus otherwise.
  - woodson 9y ago
    With the new tax regulation, as a U.S. citizen, do you have to pay taxes on tuition and stipends you receive when you do a Ph.D. overseas? (I'd assume so, since overseas income is taxable AFAIK, but I don't really know what the situation is).
    - danzig13 9y ago
      Tuition would be much lower, I think you are credited for the taxes you would pay in country, and generally - while you have to report foreign income - you have to make quite a bit before tax would be assessed.
      - throwawayjava 9y ago
darawk 9y ago
Completely agree. This tax code change is clearly the closure of a loophole. Universities should make changes to reflect that and decide what their priorities are. If they choose not to support grad students, that's on them.
ta98789878 9y ago
Actually, he addresses it quite clearly, and points out that there are also attempts to reduce universities' other source of income, the "overhead" portion of grants. FTA: Note that the Trump administration has already ("already" links to: https://www.statnews.com/2017/05/22/trump-budget-research-grants/ https://www.statnews.com/2017/05/22/trump-budget-research-gr...) made tightening overhead rules—i.e., doing the exact opposite of what would be needed to counteract the new tax—a central focus of its attempt to cut federal research funding. The point is that this is the system and it has been for decades, and everybody involved knew it and knows it. And the tax changes are a deliberate attack on the system i.e universities. If you think the system should be attacked and US research Universities defunded and destroyed, well, you're free to believe that, but this is not some kind of swindle universities have been getting away with, it's the system working as it was designed to work.
- rdtsc 9y ago
  > The point is that this is the system and it has been for decades, and everybody involved knew it and knows it. This system is also why I didn't get much from my grants because the university took out the "tuition". So just because everyone knows it and has been around is not a good enough reason to keep it around. With that approach nothing would ever change. > but this is not some kind of swindle universities have been getting away with, it's the system working as it was designed to work. Paying students $10-$30k a year doing cutting edge research is not what I call "working as designed". This is often coming from institution with billions of dollar in endowments.
  - ta98789878 9y ago
    This system is also why I didn't get much from my grants because the university took out the "tuition". I don't know the particulars of your situation so I can't comment specifically. But the grants in questions are primarily from the federal government and they are sized with the understanding that universities will deduct this "tuition" from them. If you're talking about a typical NSF, NIH, or DOD grant made to a typical research university, then the "tuition" portion of that money was intended to go to the university all along. just because everyone knows it and has been around is not a good enough reason to keep it around. With that approach nothing would ever change. Scott's counterpoint to this view is that destroying something that has problems doesn't mean something better will pop into existence. Destroying the way scientific research is funded in the US will not make a better system appear out of thin air, and it's hard to believe these changes are intended to help rather than to hurt. Paying students $10-$30k a year doing cutting edge research is not what I call "working as designed" That argument supports "the system is bad" but that doesn't mean it wasn't designed to work that way. I don't know how much the cost of research would increase if grad students were paid more. If it were practical to raise their stipends I would be for it. But the changes discussed in the post will not help grad students, even if the universities stop charging the fictitious tuition. This is often coming from institution with billions of dollar in endowments. Addressed in the post: "except for the richest few universities, they’d have to scale back research and teaching pretty drastically" yes, some universities could afford to continue doing research. Most couldn't, because research in basic science is expensive.
amluto 9y ago
This tax is still a ridiculous solution. If the problem is that university grant structures are screwed up (which they certainly are), then fix the broken grant structures. As I understand it, they're the result of a ridiculous arrangement between universities and the grant agencies, most of which are the federal government. So tell the federal government to stop issuing grants under stupid terms. Set an overhead structure, require grantees to pay their grad students, and require that all student compensation paid out of the grants go straight to the students. Or tax the universites, not the students.
- theptip 9y ago
  > As I understand it, they're the result of a ridiculous arrangement between universities and the grant agencies Do you have any links for further reading on this point? I'm not familiar with this argument, but could well believe it.
- chimeracoder 9y ago
  > This tax is still a ridiculous solution. If the problem is that university grant structures are screwed up (which they certainly are), then fix the broken grant structures. Other way around. It's not that tuition grants are being treated specially if they're taxed. All grants and material benefits of this nature are considered taxable by the IRS. Graduate tuition happens to have been given a special exemption from being taxable, and this bill is aimed at eliminating that special exemption, treating it like all other grants and material employment benefits. > Or tax the universites, not the students. There are two problems with this. First, the incidence of the tax (who actually ends up paying) is completely unrelated to who the IRS collects the tax from. This is why, even though employers are required to pay half of taxes for Social Security and Medicare, employees are the ones who bear the tax burden: 95% of any increases in FICA taxes are paid for by employees (via adjustments to wages and salaries), and vice versa.
  - jbapple 9y ago
    > 95% of any increases in FICA taxes are paid for by employees (via adjustments to wages and salaries) What evidence indicates it's 95% and not 20% or 80% or 99%?
tensor 9y ago
This doesn't make sense to me. If the "loophole" is having grad students pay tuition, then wouldn't the school still have to pay income tax on that tuition? If the issue is that they don't want this money going to tuition at all, then they could simply craft the rules around use that way. It seems to me there are many ways around this. The republicans have always had an anti-university narrative. I wouldn't blame people for assuming that this tax bill is indeed just another part of that.
philwelch 9y ago
There’s also a massive grad student bubble; for each hundred grad students who earn a Ph.D. that only qualifies them to become a professor, there’s maybe one tenure track professorship. This directly leads to exploitative situations—for example, the surplus of people with postgraduate degrees allows universities to hire adjuncts to teach undergrads at subsistence wages or worse. If you’re not going to establish lots of new national laboratories to soak up that excess talent, the least you can do is stop producing that surplus.
- _Wintermute 9y ago
  People seem to forget this, but there are jobs outside of academia.
  - chesimov 9y ago
    This would depend on the field, right? Ie in some fields are there possibly more jobs outside of academia (than within) that require a PhD, alleviating the pressure to progress from PhD->Prof?
    - philwelch 9y ago
      There are few jobs outside of academia where postgraduate degrees in liberal arts are a meaningful qualification. STEM can be hit or miss—a physics or math Ph.D. may be highly employable, but not especially more than someone with similar talent and ambition who invested their time in more marketable experience. If I were the federal budget czar, I would literally pump tens to hundreds of billions of dollars into opening national labs and hiring these STEM postgrads to do basic research. Figuring out how to efficiently produce something like high-temperature superconductors, carbon nanotubes, fusion power, carbon sequestration, gene therapy, etc. would solve some very fundamental problems, likely produce a huge return on investment, and gainfully employ thousands of highly educated people who are woefully underutilized. Even less outwardly ambitious research can produce value: look at what happened when the federal government wanted to build a more resilient computer network for DARPA. But I’m not that czar, and I think subsidizing people into career dead ends is something we could stand to do less of.

dmix 9y ago

It's sad that there seems to be little internal critique coming from within universities of the complete takeover of schools by administrators. When it does happen it's almost entirely the result of some external rumblings or a direct affront like this being twisted. I guess it's because these same administrators ultimately control the narratives (and budgets, jobs, etc) coming from the schools, creating a self-protecting cycle which only generates more administrative power. So when attempts to curtail their power happen they can twist it to make it seem like it's an attack on teachers, students, and research - instead of the separate group of people who consume the greatest amount of resources within the school, who don't generate the positive research and economic utility for which universities are typically known. Which is a shame, because there are probably no better people to stand up for this than the professors and researchers. Plenty of research has shown these people and their work aren't responsible for the massive increase in tuition and costs associated with schools. Yet the problem is perpetually the amount of revenue and income the school can make, not how it's being used.

chasil 9y ago
U.S. university students who feel that they are getting a bad deal should go to Europe. http://www.bbc.com/news/magazine-32821678 http://www.bbc.com/news/magazine-32821678 Think twice about beginning a bachelor, masters, or doctoral degree in this country, as you will be crushed with debt. With a lot of work, I was able to graduate in '94 with an E.E. degree with a total student loan debt of $1,500. That is not possible here anymore, but it is possible in Europe. If I had to do it again, I would be gone.
- rxhernandez 9y ago
  I was able to graduate with an EE degree, within the past five years and with no debt at Cal Poly (a university with one of the highest ROI on the west coast). <$7000/year is certainly doable if you're living at home with your parents.
  - chasil 9y ago
    To be honest, I spent a year living at home, but my college of engineering was 60 miles away. I lived near campus otherwise.
- woodson 9y ago
  With the new tax regulation, as a U.S. citizen, do you have to pay taxes on tuition and stipends you receive when you do a Ph.D. overseas? (I'd assume so, since overseas income is taxable AFAIK, but I don't really know what the situation is).
  - danzig13 9y ago
    Tuition would be much lower, I think you are credited for the taxes you would pay in country, and generally - while you have to report foreign income - you have to make quite a bit before tax would be assessed.
    - throwawayjava 9y ago

darawk 9y ago

Completely agree. This tax code change is clearly the closure of a loophole. Universities should make changes to reflect that and decide what their priorities are. If they choose not to support grad students, that's on them.

ta98789878 9y ago

Actually, he addresses it quite clearly, and points out that there are also attempts to reduce universities' other source of income, the "overhead" portion of grants. FTA: Note that the Trump administration has already ("already" links to: https://www.statnews.com/2017/05/22/trump-budget-research-grants/ https://www.statnews.com/2017/05/22/trump-budget-research-gr...) made tightening overhead rules—i.e., doing the exact opposite of what would be needed to counteract the new tax—a central focus of its attempt to cut federal research funding. The point is that this is the system and it has been for decades, and everybody involved knew it and knows it. And the tax changes are a deliberate attack on the system i.e universities. If you think the system should be attacked and US research Universities defunded and destroyed, well, you're free to believe that, but this is not some kind of swindle universities have been getting away with, it's the system working as it was designed to work.

rdtsc 9y ago
> The point is that this is the system and it has been for decades, and everybody involved knew it and knows it. This system is also why I didn't get much from my grants because the university took out the "tuition". So just because everyone knows it and has been around is not a good enough reason to keep it around. With that approach nothing would ever change. > but this is not some kind of swindle universities have been getting away with, it's the system working as it was designed to work. Paying students $10-$30k a year doing cutting edge research is not what I call "working as designed". This is often coming from institution with billions of dollar in endowments.
- ta98789878 9y ago
  This system is also why I didn't get much from my grants because the university took out the "tuition". I don't know the particulars of your situation so I can't comment specifically. But the grants in questions are primarily from the federal government and they are sized with the understanding that universities will deduct this "tuition" from them. If you're talking about a typical NSF, NIH, or DOD grant made to a typical research university, then the "tuition" portion of that money was intended to go to the university all along. just because everyone knows it and has been around is not a good enough reason to keep it around. With that approach nothing would ever change. Scott's counterpoint to this view is that destroying something that has problems doesn't mean something better will pop into existence. Destroying the way scientific research is funded in the US will not make a better system appear out of thin air, and it's hard to believe these changes are intended to help rather than to hurt. Paying students $10-$30k a year doing cutting edge research is not what I call "working as designed" That argument supports "the system is bad" but that doesn't mean it wasn't designed to work that way. I don't know how much the cost of research would increase if grad students were paid more. If it were practical to raise their stipends I would be for it. But the changes discussed in the post will not help grad students, even if the universities stop charging the fictitious tuition. This is often coming from institution with billions of dollar in endowments. Addressed in the post: "except for the richest few universities, they’d have to scale back research and teaching pretty drastically" yes, some universities could afford to continue doing research. Most couldn't, because research in basic science is expensive.

amluto 9y ago

This tax is still a ridiculous solution. If the problem is that university grant structures are screwed up (which they certainly are), then fix the broken grant structures. As I understand it, they're the result of a ridiculous arrangement between universities and the grant agencies, most of which are the federal government. So tell the federal government to stop issuing grants under stupid terms. Set an overhead structure, require grantees to pay their grad students, and require that all student compensation paid out of the grants go straight to the students. Or tax the universites, not the students.

theptip 9y ago
> As I understand it, they're the result of a ridiculous arrangement between universities and the grant agencies Do you have any links for further reading on this point? I'm not familiar with this argument, but could well believe it.
chimeracoder 9y ago
> This tax is still a ridiculous solution. If the problem is that university grant structures are screwed up (which they certainly are), then fix the broken grant structures. Other way around. It's not that tuition grants are being treated specially if they're taxed. All grants and material benefits of this nature are considered taxable by the IRS. Graduate tuition happens to have been given a special exemption from being taxable, and this bill is aimed at eliminating that special exemption, treating it like all other grants and material employment benefits. > Or tax the universites, not the students. There are two problems with this. First, the incidence of the tax (who actually ends up paying) is completely unrelated to who the IRS collects the tax from. This is why, even though employers are required to pay half of taxes for Social Security and Medicare, employees are the ones who bear the tax burden: 95% of any increases in FICA taxes are paid for by employees (via adjustments to wages and salaries), and vice versa.
- jbapple 9y ago
  > 95% of any increases in FICA taxes are paid for by employees (via adjustments to wages and salaries) What evidence indicates it's 95% and not 20% or 80% or 99%?

tensor 9y ago

This doesn't make sense to me. If the "loophole" is having grad students pay tuition, then wouldn't the school still have to pay income tax on that tuition? If the issue is that they don't want this money going to tuition at all, then they could simply craft the rules around use that way. It seems to me there are many ways around this. The republicans have always had an anti-university narrative. I wouldn't blame people for assuming that this tax bill is indeed just another part of that.

philwelch 9y ago

There’s also a massive grad student bubble; for each hundred grad students who earn a Ph.D. that only qualifies them to become a professor, there’s maybe one tenure track professorship. This directly leads to exploitative situations—for example, the surplus of people with postgraduate degrees allows universities to hire adjuncts to teach undergrads at subsistence wages or worse. If you’re not going to establish lots of new national laboratories to soak up that excess talent, the least you can do is stop producing that surplus.

_Wintermute 9y ago
People seem to forget this, but there are jobs outside of academia.
- chesimov 9y ago
  This would depend on the field, right? Ie in some fields are there possibly more jobs outside of academia (than within) that require a PhD, alleviating the pressure to progress from PhD->Prof?
  - philwelch 9y ago
    There are few jobs outside of academia where postgraduate degrees in liberal arts are a meaningful qualification. STEM can be hit or miss—a physics or math Ph.D. may be highly employable, but not especially more than someone with similar talent and ambition who invested their time in more marketable experience. If I were the federal budget czar, I would literally pump tens to hundreds of billions of dollars into opening national labs and hiring these STEM postgrads to do basic research. Figuring out how to efficiently produce something like high-temperature superconductors, carbon nanotubes, fusion power, carbon sequestration, gene therapy, etc. would solve some very fundamental problems, likely produce a huge return on investment, and gainfully employ thousands of highly educated people who are woefully underutilized. Even less outwardly ambitious research can produce value: look at what happened when the federal government wanted to build a more resilient computer network for DARPA. But I’m not that czar, and I think subsidizing people into career dead ends is something we could stand to do less of.