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Students succeed in campaign to preserve tuition tax waiver

Sweet doesn't begin to describe this victory.

"Awesome," said Sam Liu, a PhD candidate in economics and a key organizer in the campaign to maintain the federal income tax waiver for graduate students' and research assistants' tuition vouchers. "I still can't believe we won."

Mr. Liu, a Princeton graduate, expected it to be an interesting but futile exercise when he joined members of the Graduate Student Council in collecting signatures on a petition protesting the elimination of the waiver in the US House tax bill. Along with other graduate students from universities across the country, he also organized letter-writing and telephone campaigns aimed at members of Congress.

Before he knew it, Mr. Liu was telling his story at a Washington press conference sponsored by US Rep. Joseph Kennedy (D-Boston) on July 16, flanked by other members of the Massachusetts delegation. A joint Senate-House conference committee formed to reconcile the two House's tax bills announced compromise legislation July 25. Thewaiver had been preserved.

"You really can make a difference," Mr. Liu said afterward, still slightly amazed. After a dizzying month, he said he'd better catch up on his research "or my advisor will become extremely agitated." He also needs to catch up on his rest. "Even though it was fun, it was really tiring," he said. "Now that it's over, it's a big burden off my shoulders."

The MIT Washington Office distributed the MIT student petitions to members of the Massachusetts delegation and helped coordinate the campaign to resurrect the exemption. "Congress responded to a national outcry," said John C. Crowley, director of the MIT Washington Office. "The students did a great job. Their effort carried the day."

The graduate students' role was primarily educational. Once they explained the ramifications of eliminating the waiver, Mr. Liu discovered, members of Congress understood. "Nobody wants to be seen as anti-student," he said.

The tax reform bills were approved overwhelmingly by the Senate and the House on August 1 and signed into law by President Clinton on August 5.

Retaining the tax exemption makes "good economic sense, good educational sense and good political sense," said US Rep. Richard E. Neal (D-Springfield), a member of the House Ways and Means Committee. "It certainly was helpful to have the entire educational community active."

US Rep. James McGovern (D-Worcester), who appealed to President Clinton to join the battle to retain the waiver, credits the students for making it possible. "I'm sure I speak for many of my House colleagues when I say that we would not have had the ammunition -- and I hate to say it, perhaps not even the motivation -- if we hadn't been hearing from graduate students (and often employers) in our congressional districts," he said in a letter to Kevin Boyer, executive director of the National Association of Graduate-Professional Students.

Other provisions of the legislation of interest to the MIT community include:

Education and Retirement Savings Accounts -- Allows penalty-free IRA withdrawals for undergraduate, post-secondary vocational and graduate education expenses. Additionally, taxpayers are given the opportunity to deposit $500 into an education IRA. Earnings would accumulate tax-free, and no taxes will be due upon withdrawal for an approved purpose. The education IRA is not available for families with incomes above $160,000.

Employer-Provided Education Benefits -- Allows workers to exclude $5,250 of employer-provided education benefits from their taxable income through the year 2000. This benefit was eliminated for post-graduate studies.

Student Loan Interest Deduction -- Allows a deduction for up to $2,500 per year of interest on education loans for expenses of students enrolled at an institution of higher education. The maximum deduction is $1,000 in the first year, increasing in $500 increments each year until reaching $2,500. This deduction will be available even if the taxpayer does not itemize deductions. It is available to joint filers with income between $60,000 and $75,000, and to single filers with income between $40,000 and $55,000.

Community Service Loan Forgiveness -- Excludes from taxable income loan amounts forgiven for borrowers who take community-service jobs addressing unmet needs. Loan forgiveness programs run by government agencies are already exempt; this provision would extend that to nonprofit tax-exempt charitable or educational institutions.

Expanded benefits for pre-paid tuition plans -- Exempts from taxation some earnings on pre-paid tuition plans, and extends some benefits to private college programs.

HOPE Scholarships -- Eligible students will receive a 100 percent scholarship on the first $1,000 of tuition and fees and 50 percent on the second $1,000 during the first two years of college. The credit will be available for college enrollment after Jan. 1, 1998. The credit is phased out for incomes starting at $80,000 for joint filers and $40,000 for single filers.

Tuition Tax Credit -- Juniors, seniors, graduate students and workers pursuing lifelong learning to upgrade their skills will be eligible for a 20 percent credit to be applied to the first $5,000 of tuition and fees through 2002, and to the first $10,000 thereafter. The credit is available for college enrollment after July 1, 1998. The credit is phased out at the same income levels as the HOPE Scholarship.

A version of this article appeared in MIT Tech Talk on August 13, 1997.

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