If a university is charging tens of thousands of dollars to some students and waiving those charges for other students because of the work they are doing for the university then that's a value being provided in trade for work. Why shouldn't it be taxed?

Contrariwise if no one is really paying these tens of thousands of dollars in tuition, with the university just eating the "tuition bill" in the case of e.g. an English grad student, then why should a grantor have to pay that tuition bill for a microbiologist grad student on top of her stipend?

I get that this sucks for people caught up in it but I don't see a lot of stepping back and thinking about what makes sense.

Yep, I was down voted in another thread for pointing out the the same thing. 20 years ago, I had to pay tax on all my employer provided tuition assistance for graduate level classes. Even if my employer cuts a check directly to the university, it's still counted as my income.

So why should it be any different for a university as the employer? This is just a loophole being closed. Just get rid of the damned "dissertation credits" and problem solved.

> If they keep charging everyone else and make education free for employees, the tuition they would have paid becomes taxable income.

Is this really true though? Some universities charge in-state and out-of-state students different tuition rates, but the in-state students aren't liable for paying taxes on the difference between the tuition rates. It seems like those are just different degrees of the same thing so the same rules should apply. Perhaps the distinction is that the schools who differentiate between in-state and out-of-state students are state schools and thus play by slightly different rules?

The difference is that graduate students are employees, and the tuition waiver is a benefit of their employment.