For many current employees, tuition remission was a major draw to enter academia. Unlike starting their own business or working for a major company, university life was a more stable career choice with great perks: summers off, shorter workdays and, of course, the ability to further their education.
But this year the university announced major changes to its tuition remission policy. Instead of receiving full tuition remission for themselves, their spouses or their dependent children, affected employees will have to pay 10 percent of the costs.
After objections from faculty members, the university set a $50,000 limit, so employees who made less — roughly 20 percent of staff — would be exempt from the co-payment. The new policy does not affect unionized and NYU Langone employees, who are in separate programs.
The revised policy will cost employees an additional $1,060 to $2,100 per year, depending on the coursework they are enrolled in.
Kate Panuska, an administrator in the journalism department, began working toward her master's of business administration at Stern in January. She was informed of the policy change weeks after she was accepted into the MBA program.
"I feel like people weren't really being informed that these decisions were being made," Panuska said. "It's a little disingenuous to be hired under the impression that you're going to have certain benefits and then have them taken away without much public discussion."
Why Tuition Remission
When the university began looking for savings opportunities before the economic downturn, it turned to staff salaries and benefits, which account for about half of NYU's annual expenses.
"This year, benefits cost an additional 28.5 percent over an employee's salary; our projections showed those costs growing to 29.5 percent next year (2010-11)," NYU spokesman John Beckman said. "That's not a sustainable trajectory."
Tuition remission — a benefit used by only about 7 percent of NYU's 12,000 employees per year — was one of the first benefits on the chopping block. The administration compared NYU's policy with those of comparable institutions and decided on the 10 percent co-payment and extended waiting period.
The Comparison
When Provost David McLaughlin and Executive Vice President Michael Alfano reviewed the prospective changes to the tuition remission policy in late January, they compared NYU's current policy with those of Brown, Columbia, Cornell, Harvard, Princeton and Yale universities and the universities of Chicago and Southern California.
"When we compared NYU's home tuition remission policies with a number of peer institutions' home tuition policies, we found that NYU's home tuition remission policy is among the more generous," Beckman said. "That continues to be true even with the tuition remission co-pay, which is 10 percent for most employees."
Many major universities require eligible staff to work between six months and a full year after being hired before they can apply for tuition remission benefits. NYU's former remission policy required a three-month waiting period. Now, NYU employees will have to have worked for the university for one year to apply for the benefit or choose to pay the full tuition.
As for cost, some universities are more generous than others. Eligible employees at Columbia and USC may take one graduate class per term at no charge. Brown allows eligible faculty to take up to three job-related courses for free per fiscal year, though employees must pay $4,756 per academic year for other degree courses. Princeton provides 75 percent tuition remission for faculty who have been employed at the university for at least one year.
Taxable Benefits
Under the policy, any remission received by an employee for a graduate program beyond the first $5,250 per calendar year will be considered taxable income. The amount of taxable tuition will be added to an employee's base salary and then taxed accordingly, based on an employee's income level. This may bump many faculty members into higher tax brackets.
This provision was a part of the Economic Growth and Tax Relief Reconciliation Act of 2001. This act made significant changes to income tax rates, gift exclusions and retirement rules, along with educational assistance.
"Although it's considered 100 percent tuition remission, they take about 40 percent of the tuition out of your paycheck," Panuska said about the policy currently in place. "I'm not sure why they tax it at such a high rate, but it's something like 47 percent. So on top of that, I would have to pay 10 percent tuition."
But according to Beckman, the 10 percent co-pay will not be taxed.
