Because they want to receive the full $80k from the grant - often federal - and pay the student $25-30k. The right answer is to fix the accounting measures. For a PhD student primarily doing research which benefits the university and grantor, and taking no or few classes, why are they paying tuition? If it’s for facilities or university staff salaries, then just send the full grant to the university directly, and let the university pay the students whatever both parties see as fair.

> If it’s for facilities or university staff salaries, then just send the full grant to the university directly, and let the university pay the students whatever both parties see as fair.

This requires a change to grant structure and cannot be done unilaterally by universities.

Tuition waivers come out of grant overhead I think; they aren’t charged separately.

The universities prefer to give the discount because it let's them do stupid accounting tricks that let them get more money in grants and stuff. Universities should just adjust the tuition for these students instead of giving a discount.

Because if it's free only for employees, it's an employment benefit and it's taxable.

Then don't tie the tuition waiver to employment as a graduate assistant. The university can certainly choose to charge students with demonstrated need less so long as it's not tied to employment.

If they make the income threshold low enough that graduate assistants would qualify, say $25k a year, then pretty much everyone is going to qualify.

How many graduate students (outside of a few par time programs) make more than $25k a year? It doesn't make sense to consider parents income since graduate students are generally considered independent (even if they are being financially supported by their parents).

How do you stop everyone from qualifying for tuition waiver? Even rich parents will just make sure their kids don't have any assets if they plan on going to grad school.

You can’t have your cake and eat it too. If you’re not giving out waivers to those with the need, then you’re actually treating the waiver as part of the compensation for being a graduate assistant, and it should be taxed.

You're arguing in circles. I know it's compensation, and I'm not the one who proposed we make it need based. I'm pointing out why your solution wouldn't work.

>it should be taxed

We tax what we want to tax, and we offer deductions to encourage behavior that we think is beneficial. Scholarship income used for tuition isn't taxed. We tax capital gains differently from ordinary income. We offer mortgage interest deductions.

Should is subjective. There is no inherent reason to tax tuition waivers the same as employment income, apart from that's the way the IRS does it now (absent this specific deduction).