A recent amendment to the Senate Republicans’ domestic policy megabill could see small colleges and universities across the U.S. excused from paying an endowment tax, Politico reported Saturday.
Colleges and universities with fewer than 3,000 tuition-paying students could be exempt from paying a special tax on their endowment earnings after lawmakers raised their initial threshold for triggering the tax from the 500 tuition-paying students, according to the outlet.
The latest draft of the bill was reportedly released overnight as GOP leaders help the bill along toward the July 4 deadline.
The change followed the Senate rule-keeper Elizabeth MacDonough’s dropping of the exemption that the bill would have granted to religious and conservative colleges such as Hillsdale College — a southern Michigan college with 2,000 students, according to the outlet. The college, which receives no federal funding, lobbied hard for the carveout from what was aimed at America’s top-tier colleges with billions in endowment while receiving federal funding. The college was the only one of several other small colleges to initially secure the carveout, according to the outlet.
The House of Representatives approved the proposed increase in endowment tax from the current rate of 1.4% to up to 21% in May — but Senate Republicans scaled the increase back down, opting to create a sliding scale with a maximum rate of 8%.
The Senate’s sliding scale imposes an endowment tax rate of 4% on each college with an endowment of $750,000 to $1.25 million per student, down from the House’s proposed rate of 7%, according to Inside Higher Ed. Colleges with an endowment of $1.25 million to $2 million per student would face a 7% rate, down from the House’s proposed rate of 14%. Those with an endowment of over $2 million per student would face the maximum rate of 8% as stipulated in the Senate’s version of the sprawling bill, down from 21% proposed by the House.
Lobbyists and college authorities said the endowment tax hike would pose a setback for need-based financial aid and disproportionately affect some low-income students, according to Inside Higher Ed. (RELATED: ‘Devastating Piece Of Legislation’: Wealthy Universities Fret Over ‘Big, Beautiful’ Bill’s Endowment Tax Proposal)
The Trump administration said via a Saturday statement obtained by Politico that it “strongly supports” the Senate’s version of the bill and that it had to reach President Donald Trump’s desk July 4.
“President Trump is committed to keeping his promises, and failure to pass this bill would be the ultimate betrayal,” the statement said.
