Reply to Amount of Endowment Tax Liability Expected for 25 Elite US Universities

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=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. [/quote]

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

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.[/quote]

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. [b]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.[/quote][/b]

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 ?[/quote]

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.
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