Typical federal government right hand/left hand confusion has some graduate students at the University of Missouri in Columbia turning their pockets inside out to scrape together enough money to afford health benefits.
On one hand, Obama administration education officials are pushing for colleges and universities to ease the rising cost of attending college, increase institutional need-based scholarships and do whatever they can to help students avoid drowning in student-loan debt.
Of course, there’s also a push to make sure all Americans have affordable health care.
Meanwhile, another hand — the Internal Revenue Service — is pointing to the employer mandate provision in the Affordable Care Act that it says stops universities from subsidizing health care benefits for graduate student teaching and research assistants who are paid a stipend by the school.
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The IRS sees what the research and teaching graduate students do as work. Educators say the teaching and research furthers the students’ academic careers. But if that work is a job, then grad assistants are employees — not just students. And according to the IRS, an employer can’t subsidize an employee’s private health-care plan.
It affects graduate students across the country.
Consider MU, which in its 2015 fiscal year spent nearly $4 million subsidizing the health insurance costs of roughly 3,000 of its more than 6,000 graduate students.
Earlier this month, MU notified those graduate assistants that “due to changes in federal policy and IRS interpretation of that policy, general counsel has informed us that the University of Missouri no longer is allowed to pay for graduate students’ health insurance.” Doing so, they said, could cost the university $36,500 in fines per individual.
MU’s initial reaction was to stop the subsidies.
The university said that the dollars that would have paid students’ health benefit subsidies would instead be made available in the form of fellowships to all qualifying graduate students.
But after students complained about the change, MU Chancellor R. Bowen Loftin put the brakes on that plan. At the end of last week, the chancellor said the university will defer implementation of its decision and “as a result … will pay for health insurance for eligible graduate students.”
The university said in a statement that it “continues to navigate a complex health insurance regulatory environment. Continuing the previous practice will allow time for a clearer understanding” of the federal guidelines.
The cost of graduate school far exceeds what undergraduates pay. In 2014 about 40 percent of the then $1.1 trillion in student-loan debt was owed by graduate students. If you ask graduate students they’ll say they’re being left out of the national dialogue on reducing college costs and this latest situation “is just another hard hit,” said Hallie Thompson, a research assistant in plant science losing health benefits at MU.
The IRS ruling on subsidized health insurance forces struggling grad students, many of whom are married with families, to add the cost of health care to a budget already strained by high educational cost. Thompson says she’s lucky because she may be able to get on her husband’s health plan. But, lots of other grad students have no backup.
Kansas public universities that subsidize health plans for graduate research and teaching assistants have also decided to continue the payment practice and are waiting for clarification on the IRS interpretation of the policy.
Some national groups, including the American Council on Education, have rushed to grad students’ aid, challenging the IRS.
The council has recommended the U.S. Department of the Treasury and IRS treat grad assistants as students. “What schools are trying to do is to provide good health coverage at a low cost to graduate students,” said Steven Bloom, director of federal relations for the council.