Amount of Endowment Tax Liability Expected for 25 Elite US Universities

[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.

Agree strongly, we used endowment per student to help make the list and it was nice to see some easier to get into schools (that are targets or likelies for top kids at our high school)ranked up near highly rejectives/reach for everyone.

[Anonymous]

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Anonymous wrote:I don't understand how any of this is constitutional. We have one man making all these capricious decisions regarding various individual universities. There's no method or system. Just whims and enemies.

Very banana republic.

Well this one is a tax on investment income passed by Congress so unfortunately it is very constitutional.

Ultimately I think Princeton and Dartmouth will escape through the tuition-paying threshold, and MIT and Rice might too. For the dozen or so others that this applies to, they will manage their investment income to reduce the tax burden. But even then it isn’t large. For example, even before taking steps to optimize tax efficiency, these tax estimates are generally less than one percent of these schools’ total endowments (~0.5 percent in many cases).

Sorry to repeat my question, but what is the definition of a tuition paying student for purposes of the excise tax on educational institutions endowment income ?

Are students who receive financial aid of any type which covers at least 100% of tuition "tuition paying students" ? I would argue that they are since tuition is still paid on their behalf even though through a financial aid fund. Accordingly, schools cannot escape the 3,000 tuition paying students threshold as easily as several posters have asserted.

All of this is in the comments above. A student whose entire tuition and fees are covered by scholarships or grants provided by the university or a federal, state, or local government is not tuition paying. Therefore they don’t count toward the 3,000 threshold.

Thank you, but I am still searching for the source. I have read & reread Sec 70415 of the One Big Beautiful Bill and am not finding any such definition. However, I did find section (h) within Sec 70415 which authorizes the establishment of rules to prevent educational institutions from restructuring endowment funds to reduce or eliminate value of/and assets "subject to the tax imposed by this section". This leads me to question whether educational institutions can alter the student count for purposes of the 3,000 tuition paying students. A concise source could address my concern.

Thank you to all who reply.

This may be a barrier to universities splitting endowment funds for multiple separate specialty schools.

In short, don't piss off the Big Guy.

Although I don’t want to understate Trumps vindictiveness, I think this is less about pissing him off and more about paying for his tax cuts by passing burden onto middle class families and working class families. Schools will have to increase full pay kids and cut scholarships to pay these taxes. So it helps rich families, who don’t care about the cost and can’t get their kids in more easily. It’s basically moving higher ed back to the 1940s when these schools were basically all rich kids. Unfortunately, we don’t have the manufacturing jobs to simply all the rest of the kids nowadays.

They won't cut Financial aid for domestic students, that would piss off his base. Instead they will cut aid to foreign students and likely reduce their numbers both of which will actually please Captain Comb-over.

[Anonymous]

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

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

How will this affect the college class of 2030? Will our kids have to pay higher tuition?

[Anonymous]

Are we supposed to feel sorry for Harvard and Yale?!

They had it coming - way too much wealth concentration used to let in kids that have no business being there based on race, FGLI, etc.

[Anonymous]

I’m a fkkkkg sucker looking at that

Full pay at an Ivy and not rich !

[Anonymous]

So is it no longer good to apply as a full pay student to these schools?

[Anonymous]

Anonymous wrote:Are we supposed to feel sorry for Harvard and Yale?!

They had it coming - way too much wealth concentration used to let in kids that have no business being there based on race, FGLI, etc.

Sure, why don’t Harvard and Yale just go back to admitting rich, white males like they did 60+ years ago. All of them definitely deserved to be there.

[Anonymous]

Anonymous wrote:

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

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

How will this affect the college class of 2030? Will our kids have to pay higher tuition?

I wouldn’t worry too much about it. These amounts are small relative to these institutions’ endowments, tax planning will help minimize some of the effects, undergrad tuition is not a huge source of revenue at some of these schools, and some schools will get out of paying the tax altogether.

[Anonymous]

Anonymous wrote:Are we supposed to feel sorry for Harvard and Yale?!

They had it coming - way too much wealth concentration used to let in kids that have no business being there based on race, FGLI, etc.

They have no business being there because of their race or income? Aren’t you lovely. No qualms at all about saying the quiet part out loud.

[Anonymous]

Anonymous wrote:What's stopping a university from splitting on paper into multiple universities each with slightly under 3000 tuition paying students to avoid the tax?

Yup. It worked out well for Yugoslavia.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Are we supposed to feel sorry for Harvard and Yale?!

They had it coming - way too much wealth concentration used to let in kids that have no business being there based on race, FGLI, etc.

Sure, why don’t Harvard and Yale just go back to admitting rich, white males like they did 60+ years ago. All of them definitely deserved to be there.

Well that's when America was great I guess.

[Anonymous]

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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 a law. You don't get to make this stuff up as you go along. I'm not saying that this is the correct interpretation but we don't live in a authoritarian state yet.

[Anonymous]

There is a provision in the statute saying that IRS can adopt rules to prevent evasion schemes. Those rules could be challenged by the universities in court, and I find it very hard to believe a court would reject a university’s plan to avoid the tax by giving more financial aid to students. The law is purportedly designed to combat the universities’ hoarding of wealth.

[Anonymous]

Anonymous wrote:What's stopping a university from splitting on paper into multiple universities each with slightly under 3000 tuition paying students to avoid the tax?

Substance over form, step transaction, economic substance. If tax laws were that easy to circumvent, we would be able to fund our government.

[Anonymous]

Anonymous wrote:Are we supposed to feel sorry for Harvard and Yale?!

They had it coming - way too much wealth concentration used to let in kids that have no business being there based on race, FGLI, etc.

Okay, well be sure to point out on your application that you're in favor of this tax increase by the current administration. I'm sure they're going to want to admit lots of students that are in favor of them getting smacked around by the Trump administration.