Private colleges are concerned about the proposed increase in the endowment tax rate to 21%, arguing it could negatively impact aid for low-income students. In response, about two dozen wealthy research institutions are committing to use more endowment funds for student aid to sway lawmakers. Smaller colleges propose adjusting tax criteria based on enrollment numbers, advocating for a change from the current 500-student threshold to 5,000. Institutions prefer maintaining the 1.4% rate from 2017 and view any rate reduction as favorable to avoid significant financial losses.
What I hear from Republican members of Congress is a desire to ensure that colleges are using their charitable endowments to support today's students and researchers rather than saving too much for the future, said Princeton president Christopher Eisgruber.
Smaller liberal arts colleges want Congress to adjust the tax levels based on the number of students enrolled, suggesting lawmakers raise the head count from 500 to 5,000.
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