If Republicans Get Their Way, These Colleges Would See Their Endowments Taxed

Updated (12/5/2017, 11:31 a.m.) to include how both the House’s original and final versions of the bill and the Senate’s bill would affect colleges’ investment income.

In their sweeping plans to rework the tax code, Congressional Republicans have floated a new strategy for raising revenue: Tax college endowments.

Some college endowments, that is.

Deep within the plans — that passed by the U.S. House of Representatives in November, and the Senate’s bill, which passed early Saturday — is the language that spells out which institutions would be affected. The bottom line: Only the most-affluent colleges need worry.

In the House’s original vision for the bill, colleges would have been subject to the tax, set at 1.4 percent of net investment income, only if their endowment assets total at least $100,000 per student. The House later raised that threshold to $250,000 per student. The Senate’s bill would raise the bar further, affecting only those colleges with endowment assets of at least $500,000 per student.

There are further caveats. We’re talking about just private institutions here; public colleges and universities would be exempt. Institutions with fewer than 500 students would be exempt, too.

How many colleges does that leave? In the first House proposal, about 140, according to a Chronicle analysis. The bill passed by the House lowered that number to about 61, according to the same analysis. In the Senate’s bill, about 27 colleges would be affected. Reconciling the two provisions will be the work of a conference committee expected to meet in the coming weeks; President Trump is then expected to sign some version of the two bills into law.

We took the 2014 end-of-year endowment numbers at private colleges that met the enrollment threshold, and checked them against their 2015 enrollment figures, counting all full-time students. Below you’ll find a list of the 200 institutions with the most assets per student.

There’s a bit of wiggle room in the numbers: Both proposals would target endowments valued at a certain amount per student without specifying whether all for-credit students or just undergraduates would be counted, for example.

Should the House’s plan become law, four colleges could thank the 500-student enrollment cutoff for sparing them the tax. Soka University of America, which has a $1-billion endowment but only 400-some students, would avoid the tax. So would Sweet Briar College. In 2015, when the women’s college nearly closed its doors for good, it still had about $250,000 in endowment value for each of its roughly 300 students.

A New Collegiate Tax Bracket?

This chart shows the 200 private institutions with enrollments of 500 or more, ranked by the value of their endowment per student. Institutions marked in yellow would have endowments subject to taxation under the $100,000 threshold established in the House’s original proposal. Institutions marked in green would have endowments subject to taxation under the plan the House eventually passed. Institutions marked in blue would have endowments subject to taxation under both plans.