Valuing Tuition Waivers for Tax Purposes

8 Pages Posted: 1 Oct 2020 Last revised: 9 Nov 2020

See all articles by Erik M. Jensen

Erik M. Jensen

Case Western Reserve University School of Law

Date Written: September 1, 2020

Abstract

Some tuition waivers provided by universities to employees or family members of employees are taxable benefits; that is often the case for waivers in graduate and professional programs. This article argues that the method used by many universities to value the benefit for tax purposes—treating the tuition sticker price as if it measured value—is an incorrect reading of tax law. Because sticker price generally exceeds fair market value, the result is more taxable income to employees who “benefit” from waivers than should be the case—to the obvious detriment of the employees but also to the detriment of the universities, which may lose good students and employees to other institutions.

Keywords: Tuition waivers, tuition reductions, scholarships, discount rates, valuation, fringe benefits, IRC section 117

JEL Classification: K34

Suggested Citation

Jensen, Erik M., Valuing Tuition Waivers for Tax Purposes (September 1, 2020). 45 Journal of College and University Law 289 (2020), Case Legal Studies Research Paper No. 2020-20, Available at SSRN: https://ssrn.com/abstract=3702635

Erik M. Jensen (Contact Author)

Case Western Reserve University School of Law ( email )

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