Scott among 3 senators introducing Graduate Student Savings Act of 2017
Tim Scott (R-S.C.) was among three senators who introduced the Graduate Student Savings Act of 2017, which would allow funds from a graduate student’s stipend or fellowship to be deposited into an Individual Retirement Account (IRA).
While fellowship or stipend funding currently is taxed as income by federal and state governments, it does not qualify as “compensation” and so cannot be saved in an IRA.
“Encouraging both educational progress and retirement savings is a win-win,” Senator Scott said. “I’m glad to join a bipartisan group of senators in this effort to make a commonsense adjustment to our tax code.”
Scott was joined by U.S. Senators, Elizabeth Warren (D-Mass.) and Mike Lee (R-Utah) who introduced the bill.
“Saving for retirement is tough enough, but it’s even more difficult for graduate students and postdoctoral fellows who can’t designate a portion of their earnings to tax-deferred accounts,” Warren said. “This bipartisan bill opens a door for students who want to do the right thing and start saving early for their futures.”
“The complexity of our tax code and the incentives to save for retirement have unfortunately left many post-graduate researchers in a position where they are unable to take advantage of tax-deferred retirement savings programs like IRAs,” Senator Lee said. “This bill makes a very simple change to the code to fix this inequity.”
A majority of doctoral students report receiving some of their financial support during graduate school from fellowships or grants, and about a third of all students report that fellowships or grants were their primary source of funding.
The median doctoral student takes about seven years to finish a degree – meaning that, for the better part of a decade, a student can be prohibited from saving portions of their income in a tax-advantaged account. This bill would remove this unnecessary hurdle so that students and postdoctoral fellows can start saving today.
- A fact sheet about the legislation is available here, and the full text of the bill is available here.