Amount of Endowment Tax Liability Expected for 25 Elite US Universities

[Anonymous]

Hah, most universities have a totally separate "Foundation", so I assume they will shift the endowment there to escape taxes. It's worth paying some good CPAs with hundreds of millions of taxes at stake.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't 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.

If you actually believe that Harvard and Princeton will be off the hook by increasing aid you are kidding yourself. This isn't about the money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't 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.

If you actually believe that Harvard and Princeton will be off the hook by increasing aid you are kidding yourself. This isn't about the money.

Then what is it about ?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't 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.

If you actually believe that Harvard and Princeton will be off the hook by increasing aid you are kidding yourself. This isn't about the money.

Well, see, there is this thing called a tax law, and it isn’t applied discretionarily. It’s not about “getting off the hook” or the intent of changing the tax.

I say “changing” because the endowment tax already existed before this most recent bill. The IRS has already issued its formal guidance on which students apply to the thresholds. If a student doesn’t pay tuition (because they are charged zero due to aid), they don’t count toward the threshold. If you have fewer than 3,000 students that count toward the threshold, you don’t pay the tax. Thats how it works.

The reason Princeton may be able to push below the threshold is because a lot of the grad students go for free, and a lot of undergrads receive heavy assistance. They can likely get it under 3,000 if they haven’t already. It would be much harder for Harvard because Harvard is more reliant on grad student tuition through the MBA, law, and Kennedy programs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't 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.

If you actually believe that Harvard and Princeton will be off the hook by increasing aid you are kidding yourself. This isn't about the money.

it's about time. they'll move their numbers down, follow the law as written. that's a year from now. if the government wants to fight them on this, they can sue them. another year passes. etc etc. everyone just trying to run out the clock

if I were a college, I'd shift al financial aid to tuition. and keep room and board and insurance and extras at full price. everyone wins.

[Anonymous]

Would appreciate help with three basic questions regarding "educational institutions with at least 3,000 tuition paying students":

Question #1: Is it settled that students receiving 100% tuition scholarship grants and/or financial aid are NOT counted as "tuition paying students" ?

I would argue that scholarship & financial aid students do pay tuition in that the tuition comes from a scholarship fund or a financial aid fund. Such funds are limited so they must be paying tuition on behalf of the particular students. Therefore, simply placing enough students on 100% scholarship and/or other financial aid does not result in a reduced head-count of "tuition paying students" for purposes of the endowment excise tax.

Question #2: Are graduate students included in the 3,000 tuition paying students count ?

My assumption is that they are, but I would like some authoritative affirmation of my assumption.

Question #3: Are graduate students counted/included when the overall total endowment is broken down into "endowment per student" (EPS) ?

My assumption is that graduate students are counted, but I am not sure of 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.

An issue to consider is whether or not U of Richmond must decrease enrollment to become excluded by virtue of fewer than 3,000 tuition paying students standard. Maybe U of Richmond could place a few hundred students on full (100%) tuition grant aid to escape the excise tax on their endowment.

The definition of "tuition paying student" is not clear to me in this context.

[Anonymous]

Anonymous wrote:

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.

Is your statement simply your interpretation of "tuition paying student" or has "tuition paying student" been clearly defined elsewhere for purposes of this excise tax on educational institution endowments ?

[Anonymous]

(OP again.)

Seems clear to me that students enrolled in any tuition-free educational institution (such as NYU's medical school ?) would not be counted for purposes of the "tuition paying student" threshold because no one pays tuition. But what if such a student took a course or courses in another NYU graduate or undergraduate program ?

[Anonymous]

Anonymous wrote:(OP again.)

Seems clear to me that students enrolled in any tuition-free educational institution (such as NYU's medical school ?) would not be counted for purposes of the "tuition paying student" threshold because no one pays tuition. But what if such a student took a course or courses in another NYU graduate or undergraduate program ?

If they are paying tuition for that course, they are tuition-paying.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Is your statement simply your interpretation of "tuition paying student" or has "tuition paying student" been clearly defined elsewhere for purposes of this excise tax on educational institution endowments ?

It’s been defined. Here are the IRS regs from when the tax was first put into place (click the pdf link to read them in their entirety): https://www.irs.gov/newsroom/irs-issues-guidance-on-the-tax-on-the-net-investment-income-of-certain-private-colleges-and-universities

“For purposes of section 4968, the proposed regulations also provide that whether a student is “tuition-paying” is determined after taking into account any scholarships provided directly by the educational institution and any work study programs operated directly by the educational institution…Accordingly, a student will be considered a tuition-paying student for purposes of section 4968 if payment of any tuition or a fee is required for the enrollment or attendance of the student for courses of instruction after the application of any scholarships offered directly by the institution or work study program operated directly by the institution.”

And before someone jumps on the “fees” part, they also make clear that this refers to what colleges generally refer to as mandatory university fees, not some additional fee that comes with a specific course. And room and board is also not part of it.

[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.

To make this work many schools on this list will have to abandon need-blind in making admissions decisions. Even the top schools need tuition revenue. Each school will need to figure out if its bottom line or net revenue is better if: 1) decrease the number of students, 2) increase the number of students on full aid for tuition and fees, or 3) pay the endowment tax.

This is a win for the enrollment management companies and their algorithms.

[Anonymous]

Williams should be taxed the highest amount.

[Anonymous]

Anonymous wrote:Williams should be taxed the highest amount.

Williams has fewer than 3000 students.

[Anonymous]

Great time to be an LAC. Amherst and Williams are getting tax cuts!