Amount of Endowment Tax Liability Expected for 25 Elite US Universities

[Anonymous]

Informative article with chart about the upcoming endowment tax on colleges & universities:

https://aei.org/education/how-much-will-universities-pay-in-endowment-tax/

[Anonymous]

I dont know why they don't stop charging tuition. Or move the FA limits up to 500k HHI and 3mm assets. so only 20% pay tuition.

[Anonymous]

Anonymous wrote:I dont know why they don't stop charging tuition. Or move the FA limits up to 500k HHI and 3mm assets. so only 20% pay tuition.

I think that I love you.

[Anonymous]

The article gives us, essentially, a Top 25 list of schools with over 3,000 students based on objective criteria (endowment per student):

1) Harvard
2) Yale
3) Princeton
4) Stanford
5) MIT

6) Notre Dame
7) U Penn
8) Northwestern
9) WashUStL
10) Duke

11) Vanderbilt
12) Johns Hopkins University (JHU)
13) Dartmouth College
14) Brown
15) Emory

16) Rice
17) U Chicago
18) Columbia
19) U Richmond
20) Cornell

21) Carnegie Mellon University (CMU)
22) Colgate University
23) U Tulsa
24) College of the Holy Cross
25) Wesleyan University

Of course, several schools with an enrollment below 3,000 students are also powerhouses in terms of endowment per student; such schools include Amherst College & Williams College among others, but won't be subject to the endowment tax due to the small size of their respective students bodies.

[Anonymous]

Anonymous wrote:The article gives us, essentially, a Top 25 list of schools with over 3,000 students based on objective criteria (endowment per student):

1) Harvard
2) Yale
3) Princeton
4) Stanford
5) MIT

6) Notre Dame
7) U Penn
8) Northwestern
9) WashUStL
10) Duke

11) Vanderbilt
12) Johns Hopkins University (JHU)
13) Dartmouth College
14) Brown
15) Emory

16) Rice
17) U Chicago
18) Columbia
19) U Richmond
20) Cornell

21) Carnegie Mellon University (CMU)
22) Colgate University
23) U Tulsa
24) College of the Holy Cross
25) Wesleyan University

Of course, several schools with an enrollment below 3,000 students are also powerhouses in terms of endowment per student; such schools include Amherst College & Williams College among others, but won't be subject to the endowment tax due to the small size of their respective students bodies.

Really does show how underranked Notre Dame (a primarly undergrad institution) is by USNews…

[Anonymous]

U Richmond is only a couple hundred over the 3,000 student cutoff. I wonder if schools like that would actually be better off slightly reducing their enrollment to fall below the tax requirement.

[Anonymous]

The new law applies to private non-profit institutions of higher education that enroll at least 3,000 students—up from the previous threshold of 500 students. It sets new tax rates on net investment income at three different tiers. Endowments between $500,000 and $750,000 in assets per student will be taxed at the current rate of 1.4 percent. Endowments between $750,001 and $2 million per student will be taxed at a rate of four percent, while endowments above $2 million per student will be taxed at a rate of eight percent. This falls in between private foundations, which pay 1.39 percent, and corporations, which pay 21 percent.

https://www.aei.org/education/how-much-will-universities-pay-in-endowment-tax/

The article goes on to show estimated taxes for 5 years. Let the accounting games begin. They will drive down the income figure and lobby to change this.

[Anonymous]

Anonymous wrote:U Richmond is only a couple hundred over the 3,000 student cutoff. I wonder if schools like that would actually be better off slightly reducing their enrollment to fall below the tax requirement.

Oh yes, I was thinking the same. I’m sure they will.

[Anonymous]

Anonymous wrote:U Richmond is only a couple hundred over the 3,000 student cutoff. I wonder if schools like that would actually be better off slightly reducing their enrollment to fall below the tax requirement.

There are a few schools on the edge where it might make sense to shrink for long term purposes. Richmond, Colgate, and Holy Cross all fall into this category.

[Anonymous]

Anonymous wrote:I dont know why they don't stop charging tuition. Or move the FA limits up to 500k HHI and 3mm assets. so only 20% pay tuition.

Princeton probably will, at least to get the number of tuition-paying students below 3,000. They aren’t that far off already.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I dont know why they don't stop charging tuition. Or move the FA limits up to 500k HHI and 3mm assets. so only 20% pay tuition.

Princeton probably will, at least to get the number of tuition-paying students below 3,000. They aren’t that far off already.

No way they are going to let Princeton do a bit of wiggling to get off the hook. Some of the SLACs can probably get away with it but not Princeton.

[Anonymous]

Anonymous wrote:

The new law applies to private non-profit institutions of higher education that enroll at least 3,000 students—up from the previous threshold of 500 students. It sets new tax rates on net investment income at three different tiers. Endowments between $500,000 and $750,000 in assets per student will be taxed at the current rate of 1.4 percent. Endowments between $750,001 and $2 million per student will be taxed at a rate of four percent, while endowments above $2 million per student will be taxed at a rate of eight percent. This falls in between private foundations, which pay 1.39 percent, and corporations, which pay 21 percent.

https://www.aei.org/education/how-much-will-universities-pay-in-endowment-tax/

The article goes on to show estimated taxes for 5 years. Let the accounting games begin. They will drive down the income figure and lobby to change this.

Why are private foundations off the hook? They apply for and get federal grant money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I dont know why they don't stop charging tuition. Or move the FA limits up to 500k HHI and 3mm assets. so only 20% pay tuition.

Princeton probably will, at least to get the number of tuition-paying students below 3,000. They aren’t that far off already.

No way they are going to let Princeton do a bit of wiggling to get off the hook. Some of the SLACs can probably get away with it but not Princeton.

The threshold is 3,000 tuition-paying students. This is the legal interpretation as provided by the IRS. It’s not about “letting” anyone get off the hook. If you have fewer than 3,000 students paying tuition because you gave them enough aid that their tuition is zero, you don’t pay the tax.

[Anonymous]

Notre Dame really is a very wealthy school.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

The new law applies to private non-profit institutions of higher education that enroll at least 3,000 students—up from the previous threshold of 500 students. It sets new tax rates on net investment income at three different tiers. Endowments between $500,000 and $750,000 in assets per student will be taxed at the current rate of 1.4 percent. Endowments between $750,001 and $2 million per student will be taxed at a rate of four percent, while endowments above $2 million per student will be taxed at a rate of eight percent. This falls in between private foundations, which pay 1.39 percent, and corporations, which pay 21 percent.

https://www.aei.org/education/how-much-will-universities-pay-in-endowment-tax/

The article goes on to show estimated taxes for 5 years. Let the accounting games begin. They will drive down the income figure and lobby to change this.

Why are private foundations off the hook? They apply for and get federal grant money.

Because the bill specified educational institutions. It’s to their benefit to make education more inaccessible and make the citizenry less educated.