Financial Consequences of Holding a Graduate Research Assistantship
Vs. a Training Grant, Scholarship, or Fellowship

It is the policy of the Graduate School that the dollar value of a training grant, fellowship, or scholarship awarded to a student should be at least as great as the value of a Graduate Research Assistantship awarded to a student at a comparable stage of training. Unfortunately, it is not always easy to establish parity between, say, a fellowship and an assistantship because of the differential effect of taxes, insurance benefits, and loan eligibility on the net income received from the two kinds of awards. Following are the major factors that should be considered in attempting to determine the financial consequences of one award or another.

Personal Income Tax--A student holding a Graduate Research Assistantship is considered to be a student appointee and receives compensation from the M.D. Anderson Cancer Center or the Health Science Center for conducting a particular activity (viz., research). Currently, students on training grants at the Cancer Center and Health Science Center are appointed as Graduate Research Assistants. All of the income received from an assistantship of this type is considered taxable by the federal government. The employing institution will withhold income tax monthly and will issue a W-2 form at the end of the year.

The stipend a student receives from a scholarship or fellowship is also considered taxable by the federal government. However, a student can deduct from gross income any documentable educational expenses for tuition, fees, books, supplies, and equipment required for courses.

If the fellowship stipend is disbursed by the Health Science Center the institution will not withhold any portion of the student’s tax obligation nor will it report stipend disbursements to the IRS. An exception to this general rules applies to non-resident aliens who fall within a special set of IRS regulations. For these individuals the university withholds a flat 14% tax from their stipend checks.

If the student appointed and paid by MDACC is awarded a Trainee Excellence Award or a Trainee Recognition Day Award, the award is processed through MDACC Payroll and the student is taxed according to his/her tax status in the payroll system. Awards are taxed at the supplemental rate for federal withholding.

Students can calculate their tax liability for a GRA or fellowship using IRS methodology as applied to their own financial circumstances.

Social Security Tax (F.I.C.A.)--GSBS Graduate Research Assistants are exempt from making contributions to eventual benefits from Social Security and Medicare (the FICA tax).

The stipend a GSBS student receives from a scholarship or fellowship (administered by M.D. Anderson or the Health Science Center) is not considered a wage and is not, therefore, subject to social security tax.

Insurance Benefits--A student who has been appointed as a half-time Graduate Research Assistant for a period of at least 4-1/2 months is eligible to receive premium sharing from the institution (M.D. Anderson or Health Science Center) which will contribute toward the student's medical insurance.

A student in the Health Science Center who receives a stipend from a scholarship or fellowship in some form other than a GRA administered by the Health Science Center is not considered an employee and is therefore ineligible to receive employee insurance benefits. However, the student may obtain health insurance coverage through the UT-Houston Auxiliary Enterprises. The student's advisor is encouraged to supplement the student's stipend in order to compensate for this difference in benefits.

Likewise, at M.D. Anderson, a student who receives compensation in the form of a Graduate Research Assistantship is considered a student appointee, which means the student is eligible for employee insurance and premium sharing. A student who receives a Welch or Hite Fellowship, however, even though it is administered by M.D. Anderson, is not eligible for employee insurance benefits. Hite fellows may purchase medical insurance from the UT-Houston Auxiliary Enterprises as described above.

Loan Eligibility--The kind of financial aid a student receives (assistantship vs. fellowship) can make a significant difference in the amount of federal loan for which the student is eligible. The difference will be important to students who rely on loans for a substantial part of their support.

The reason for the distinction is that the Congressional Methodology used to calculate the student's loan eligibility treats assistantships and scholarships differently. Without going into any detail, the net result is that in most cases the student who holds an assistantship (GRA) will be eligible for a larger need-based loan than the student who holds a fellowship of the same amount. Of course, the amount of the difference will depend on the student's particular financial circumstances. The student is encouraged to consult with personnel in the UT-H Student Financial Services office about these calculations.