Awesome Financial Benefits to Being a Grad Student (and Terrible Detriments)

So, graduate school kind of sucks – especially Ph.D.s because they go on forever.  (Can you tell I’ve been at it a while?)  However, there are definitely some financial benefits to being in school, particularly the kind of school that pays you to be there (though not nearly as much as we’d be getting in the real world).  Kyle and I collaborated on this list, but we’re represent a small slice of grad student experiences.  Please add your observations below as I’m sure experiences will vary!




1. student discounts at various retailers – movie theaters, museums, cell phones, apartments, car insurance, software, local stores and restaurants


2. student checking accounts – depends on the bank, but usually free checking with no minimums


3. residency choice – parents’ state or current state?


4. student loan deferment!


5. cheap or free entertainment on campus – movies, theater, lectures.  at minimum, the PhD movie!


6. free Amazon (affiliate link – thanks for using!) Prime (well, not any more – just discounted)


7. free food at seminars, receptions, and departmental events


8. getting paid with a 1099 MISC instead of a W2 – don’t have to pay Social Security/Medicaid taxes [UPDATE: in either case, grad student stipends shouldn’t be subject to FICA taxes]


9. the library (including free access to journal articles)


10. subsidized gym membership including classes


11. subsidized or free sporting events tickets




1. not eligible for retirement contribution tax credit for low income earners


2. not permitted to have a second job


3. not eligible for employer-based retirement program (meaning no match)


4. getting paid with a 1099 Misc instead of a W2 – no one believes this is “earned income,” which is what you need to contribute to a Roth


How does being in graduate school affect you financially?  Is it a net positive?


comic by the venerable Jorge Cham


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14 Responses to "Awesome Financial Benefits to Being a Grad Student (and Terrible Detriments)"

  1. Heather says:

    Woah, I’m shocked that you can’t contribute to a Roth IRA! Just because you get paid in a way that gets documented with a 1099-MISC form? Why can’t you get your stipend/salary documented with a W2 form?

    As a grad student I feel most of the same Awesome-ness, but I don’t get subsidized or free sporting event tickets. 🙁 I *do* get reimbursement for most triathlon entry fees with the school club which can add up to several hundred dollars each year. Because I get a W2, #4 is not on my Terrible list, and even when I was employed, my employer didn’t offer retirement matching, so I don’t see that as a loss. For some health care may be on the Terrible list, although I enjoy being able to see a doctor (conveniently on campus) for zero-copay for minor aches, sickness.

    I think there’s also less pressure for grad students to make “real world” purchases. For example, owning a nice TV, purchasing a home and the entertainment items (furniture, dining table, dishes, etc.), wearing nice (and pricey) clothing to work, taking a cab instead of a bus, spending more on gifts at the holidays… These may be things that a young professional may feel entitled or pressured to do, even if it’s not in their best financial interest. While I’d like to say that I wouldn’t let those pressures influence me, I do appreciate that my friends and family support my thrifty lifestyle and a grad student.

    1. Emily says:

      I’m surprised you hadn’t heard about the 1099 Roth situation. I wouldn’t say it’s 100% determined (I have seen evidence of room for negotiation with the IRS), but it’s generally professed by those who have looked into it that 1099 earnings are not earned income. 1099s are generally given for winnings and such. I used to be paid with a 1099 and now I’m on a W2 – obviously I’ve been doing the same job all along so I don’t see why it’s different to the IRS. 🙂 When I was at the NIH I was paid with a 1099G and they were extremely explicit that it was ineligible for IRA contributions, but I haven’t heard that in a similarly official way at our university concerning the 1099 MISC.

      I almost included student health on this list as a benefit, but I thought it wasn’t “financial” enough – it being on campus is a big time-saver. We don’t pay any premiums for our health care but I wasn’t sure if that was a universal for grad students who get health care through their universities.

      You don’t have free access to any sporting events?? We get into football games free and pay $10/game for men’s basketball, and I think basically everything else is free (but I’ve only attended those two).

      TOTALLY agree on the thrifty student lifestyle being acceptable as students. It’s difficult to quantify but I think it’s one of our biggest benefits. I may have even taken it to an extreme with my air mattress situation.

  2. Jo Anna says:

    Hi Emily,
    Great blog! Regarding the taxes paid/not paid on a 1099 MISC form, I *hated* it when I was paid as 1099 instead of W2, because at the end of the year (at least according to my accountant) I had to not only pay income tax on the funds, but also “self-employment tax.” This meant that instead of my employer paying 7.5% FICA and I paying 7.5% FICA, I had to pay the whole 15% social security/medicaid tax. This meant that when I was switched to a W2 in grad school, my taxes were 7.5% LESS than they were when I was on the 1099 MISC. Do you think I/my accountant missed something?

    1. Emily says:

      I didn’t pay that self-employment tax when I was getting a 1099-MISC, and the IRS never said anything about it. I don’t think I’ve heard of any other students paying that, either. Unless your accountant works with students getting 1099-MISCs all the time, I would ask your department’s payroll person if you had to pay it and trust his/her answer. Maybe you can get some kind of refund if not.

  3. Lauren says:

    I have a Roth IRA…should I not?

    I had no trouble setting it up.

    1. Emily says:

      No one verifies that you have “earned income” when you set it up. I’m not sure at what point anyone (the brokerage? the IRS?) verifies that the contributed income was earned. The good news is that even if you continue to be paid by 1099 MISC, when you get married your husband can contribute to an IRA on your behalf and that is for sure legitimate (assuming he has earned income).

  4. Do you think someone who is financially independent already will enjoy getting a PhD if they love to learn, do research, write, and teach?

    To get paid to learn at a prestigious university and getting a doctorate degree when you have money sounds like a fantastic proposition no?


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    1. Emily says:

      Disclaimer: These opinions are uniquely mine and come from a science/engineering perspective – I don’t know much about PhDs in other fields. And I’ve never discussed this with anyone so I don’t know what others might think.

      I actually think that the financially independent part has little impact on whether or not you would enjoy getting a PhD. It sounds weird but money is rather irrelevant to a funded student. No one is in academia for money but rather the subject matter, the freedom, and possibly the colleagues. I only know one person who worked for a significant amount of time before starting grad school so being independently wealthy would be very unusual so I’m sure you’d end up being treated like everyone else. I don’t know what your job is now, but it might be strange for you to adjust to the fact that success in academia as a student is not monetarily rewarded (except for fellowships, maybe, but you have to apply for them so it’s more like a contest than a reward). Honestly, in a lot of ways I think having more money while in grad school might be a distraction. The way I like to phrase it (speaking as the university/department) is “We expect you to work for free. To facilitate that, we pay you.” Of course if funding isn’t typical in the field you’re looking at, having money would take a ton of stress off the hustle for your living expenses. But you’ll still probably have to look for grants and fellowships because of the prestige attached to them, even if you don’t strictly need them to pay yourself.

      I think you should separate your thoughts – there is the process of getting the PhD and then there’s what you want to do with it. In my field, getting the PhD looks radically different from being a principal investigator. Overall, only 4% of PhDs end up in academia. So if you want to be a professor and research, write, and teach, then yes, you do need to get a PhD, but you might not like it while you’re in it depending on the mix of activities required of you during the degree. Also, you’re working for someone, whereas as a professor you’re working for yourself within the university and grant system. So how you get along with your advisor matters a heck of a lot to whether or not you’ll like grad school. But it’s worth it if it fulfills your career goals.

      IMO, I think it would be strange and possibly futile to attempt to obtain a PhD without plans to use it in your future career. It’s a long, difficult process so I think you really have to want to achieve that end goal for some reason. You can learn, research, write, and teach without a PhD. So why get the PhD specifically? I think you must tie that to a career goal. If you achieved FI and planned to never work, I don’t know if you would want to finish the PhD – what would be the point?

      Grad school kind of sucks and people love to complain about it. Or you can treat it like a job and create healthy boundaries – this may be easier for you since you got out of the student mindset for a while. I would say that if you have some ideas for how you would use the degree, go ahead and apply. You can always leave with a master’s if you decide you don’t like it or your career plans change. Where are you in the process? Checking out programs and schools? Planning to apply for the fall?

      Any other PhD students (I know there are lots of you who read!) want to add in your perspective?

  5. […] tax exception for 1099-MISC income wasn’t something I addressed in the Roth IRA post (although I mentioned it as a perk for some students) but I probably should have.  You do not pay into the Social Security and […]

  6. […] I am a grad student.  That’s under “occupation” right at the bottom of the 1040!  It doesn’t […]

  7. […] have time to cook elaborate meals at first, anyway.)  The start of the school year provides free food opportunities galore, particularly for first-years.  If you are really strapped for cash, don’t pass up any of these […]

  8. […] are both benefits and detriments to being grad students.  We (generally speaking) don’t pay Social Security taxes, but we also may not have the earned […]

  9. […] of the benefits I’m losing as I transition out of graduate school is free access to my university’s gym.  Apparently the graduate school no longer completely pays for the gym membership for students in […]

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