>The only thing they get "tax free" is tuition, which they shouldn't be paying because in most cases they aren't even taking any classes. That's my point. If y

>The only thing they get "tax free" is tuition, which they shouldn't be paying because in most cases they aren't even taking any classes. That's my point. If you swap the $20k in my example to tuition, the economics is exactly the same. They're being charged it either way. The fact that the university is giving it "for free" allows them to pay the grad student that much less. As a result, taxable income vanishes.