- Harvard hires lobbyist, MIT visits DC to plead cases
- Republicans have their sights set on higher education
Even before Donald Trump said he would
Last week’s cancellation of federal grants and contracts to Manhattan’s Ivy League school — over its alleged failure to combat antisemitism on campus — represents just one tool in Trump’s playbook to ratchet up pressure on elite universities. The institutions also face multiple efforts to increase taxes on their endowments, and they’re mobilizing to defeat them.
Columbia said it’s committed to combating antisemitism and pledged to work with the government to restore funding, but Republicans have set their sights on higher education institutions they view as promoting progressive values at the expense of common sense and meritocracy.
The onslaught has created an “existential threat” for colleges, according to the University of Pennsylvania’s president.
The types of elite universities currently subject to the endowment tax — private colleges with at least $500,000 per student — are under particular scrutiny. Universities say the endowments help fund scholarships, and higher taxes will come at the expense of the neediest students.
But they also must contend with the perception that institutions serving the sons and daughters of some of the world’s most privileged people are sitting on billions of dollars that they want to grow tax free, a benefit that isn’t available to most other private foundations.
Endowments have a “stunning” amount of capital, but the cost of college remains steep, said Representative
Davidson College President
“If the goal is to make college more affordable, this is not an effective approach,” Hicks said in an interview. His school meets 100% of financial need for students.
Hicks’ fear is that colleges like his will end up as collateral damage in the GOP’s efforts to punish more
‘Super Bowl of Tax’
Lawmakers are calling 2025 the “Super Bowl of tax” as they look to extend a 2017 overhaul under the first Trump administration, which implemented the endowment levy. The 1.4% tax on net investment income is similar to one that private foundations pay.
The levy generated more than $380 million from 56 colleges or universities in 2023 — affecting just a small fraction of the 1,700 private, nonprofit US schools. Most of them are well known, places like
But some are lesser known:
Both Trump and Vice President
Boosting the burden for rich colleges would do little to offset the cost of extending the Trump tax cuts, estimated to be in the trillions of dollars. One bill would increase the tax to 21%, the same as the corporate tax rate, which the Tax Foundation forecasts could raise $70 billion over a decade.
One risk for schools is that the tax is expanded by lowering the threshold to endowments with $250,000 per student, or even less.
Broadening the tax could spur pushback from lawmakers who represent areas where those institutions are located, according to Dustin Stamper, who leads the tax legislative affairs practice for Grant Thornton.
Amid the threat, colleges are beefing up their lobbying efforts. Harvard, the richest university with a $53 billion endowment,
Enabling Student Aid
Colleges increased their endowment spending to $30 billion in fiscal 2024, a 6% increase, according to a study of over 600 endowments with $873.7 billion in assets by the National Association of College and University Business Officers and Commonfund Institute. Nearly half of that was spent on student aid, the study said.
One fear within higher ed is that a higher endowment tax could deter wealthy donors, knowing that a portion of their money is going to the US Treasury rather than to students or school projects.
College President Scott Feller says he’s trying to get in front of the issue, reaching out to Indiana’s Congressional lawmakers. He said most of them are surprised the school would be affected.
“Our endowment is less than 1% of Harvard’s, yet we’re taxed at the same rate as the elite institutions,” he said in an interview. “We’re trying to do a lot of education on this — helping folks understand how different our situation is.”
(Adds Harvard hiring freeze in 12th paragraph.)
--With assistance from
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Brendan Walsh
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