House Republicans Push to Raise College Endowment Tax to 21%
WASHINGTON, DC., May 15, 2025 - A House Republican tax package advanced this week includes a controversial provision to dramatically increase the tax on wealthy private college endowments. Under the proposed measure, institutions with endowment assets exceeding $2 million per student would face a 21% excise tax—up from the current 1.4%. The bill, which passed the House Ways and Means Committee along party lines, would create a four-tier tax structure and adjust how student populations are counted.
The legislation—part of the broader “One, Big, Beautiful Bill”—seeks to recast large endowments as taxable financial engines, drawing comparisons to corporate entities. Republican lawmakers argue the change is long overdue, claiming elite universities have accumulated massive untaxed fortunes while tuition continues to rise.
Critics, however, warn the proposal could devastate financial aid and research funding at institutions with large—but often restricted—endowments. The bill would also exclude international students from endowment-per-student calculations, further increasing tax exposure for globally diverse campuses.
Religious colleges founded before 1776 would be exempt if they maintain a continuous religious mission—language widely seen as tailored to protect specific institutions.
The bill now heads to the House Budget Committee. A floor vote is expected before Memorial Day, though its prospects in the Senate remain uncertain.
*Sources:
https://www.highereddive.com/news/house-panel-advances-bill-college-endowment-tax-21/748169/