Wyden, colleagues introduce retirement savings legislation

Sen. Ron Wyden, D-Ore., joined Sen. Elizabeth Warren, D-Mass., along with Sens. Mike Lee, R-Ariz,. and Tim Scott, R-S.C., on Monday in introducing the Graduate Student Savings Act of 2016, 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 is currently taxed as income by federal and state governments, it does not qualify as “compensation” and so cannot be saved in an IRA.

“Our students should not be forced to choose between pursuing higher education and saving for retirement,” Wyden said. “By restricting the use of graduate and fellowship stipends for retirement accounts, we are forcing our students to make this difficult choice. This bipartisan bill takes a necessary step towards helping students in Oregon achieve their academic goals, while giving them the opportunity to invest in their future.”

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 major portions of her 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 .