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4d ago

House GOP Weighs Massive Tax Hike on Wealthy College Endowments

Proposals to raise the endowment tax rate to as high as 21% reflect President Trump's clash with elite universities and Republican efforts to offset federal spending.

A passer-by walks along a path on the campus of Brown University, in Providence, R.I., Monday, Oct. 12, 2020. (AP Photo/Steven Senne)
Spring buds appear on a tree near Eliot House, rear, at Harvard University, Tuesday, April 15, 2025, in Cambridge, Mass. (AP Photo/Charles Krupa)
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Overview

  • House Republicans are considering raising the college endowment tax rate from 1.4% to between 14% and 21%, with some lawmakers proposing even higher rates.
  • President Trump has blocked federal funding for Harvard, citing its $53 billion endowment, and called for stripping the university of its tax-exempt status.
  • The current tax, introduced in 2017, applies to colleges with large endowments and generated $380 million in 2023 from 56 institutions.
  • Raising the tax to 14% is projected to generate $10 billion over the next decade, but critics argue the financial burden could destabilize smaller colleges and reduce student aid.
  • The debate over endowment taxation highlights broader Republican critiques of higher education's public benefit and tax privileges.