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In August, President Joe Biden announced a new student loan debt relief plan, which immediately amplified already impassioned discussions about the cost of college, student debt burdens, and college and university endowments.

Lawmakers in Washington, DC are largely divided along party lines in their support for or against the Biden plan. Some House Republicans have called for a hearing, due to their concerns over the administration’s authority to enact such a sweeping and costly policy.

Republicans also are working to advance their own higher education priorities. The top Republican on the House Committee on Education and Labor, Rep. Virginia Foxx (R-NC), has announced plans for a “vigorous” higher education bill in the next Congress. Several Republican lawmakers already have introduced or announced plans that would have severe consequences for colleges:

  • Sen. Josh Hawley (R-MO) introduced the Make the Universities Pay Act, which would make colleges liable for 50 percent of any student loan balance that is in default.
  • Sen. Tom Cotton (R-AR) introduced the Student Loan Reform Act of 2022, which would impose a 20 percent luxury tax on undergraduate tuition fees over $40,000 to fund workforce training and place a 1 percent tax on the fair market value of private college endowments.
  • Sen. Rick Scott (R-FL) introduced the Changing Our Learning, Loans, Endowments, and Graduation Expectations Act, which would require institutions with endowments of $1 billion or more to cover between 25 and 75 percent of the cost of attendance for students.
  • Rep. Dave Joyce (R-OH) introduced the Higher Education Accountability Tax Act, which would increase the current tax levied on endowments from 1.4 percent to 10 percent and increase the number of universities that must pay the tax by expanding the threshold to all private colleges and universities with an endowment valued at $250,000 or more per student.


The likelihood of these proposals becoming law hinges upon the outcome of Election Day 2022. (Notably, political analysts have long predicted that Republicans will gain control of the House of Representative after Election Day this fall—if not also the United States Senate. Democrats currently hold slim majorities in both houses.)

While Election Day outcomes will not be known until November, it already is clear that the higher education sector is facing unprecedented scrutiny and business practices. Tuition-setting, discounting decisions, endowment spending policies are top concerns for politicians and the public alike. Even if Democrats remain in control of Congress, they likely will further investigate the cost of college, student debt burdens, and the uses of endowment spending.

NACUBO continues to answer common questions about endowments and college costs, including in the media, and we will be working to update resources that demonstrate the value proposition of completing a postsecondary education. College and university leaders also should consider their roles in this public debate, and we urge business officers to use your expertise and data to communicate the value of higher education and the important roles your endowments serve in supporting students, faculty and staff, research efforts, and more.

Background: The 2017 Net Investment Income Tax

While some of the proposed bills include new taxes on endowments, some private institutions already face a net investment income tax passed under the Tax Cuts and Jobs Act of 2017. By its definition, the endowment tax is imposed on some large research institutions, some small colleges, and some institutions with medical schools and teaching hospitals. It specifically affects colleges with at least 500 tuition-paying students during the preceding taxable year—more than 50 percent of whom are located in the United States—and the aggregate fair market value of the assets of at least $500,000 per student.

NACUBO opposed the provision in 2017 and remains opposed to this tax as it is an unprecedented attack on the tax-exempt status of higher education institutions, reducing charitable resources available for financial aid, research, academic support, public service, and innovation. In her 2021 testimony before the House Ways and Means Committee, then-NACUBO and CEO President Susan Whealler Johnston stated, “Policies can be strengthened to encourage giving, and policies that discourage giving and take charitable resources away from education, such as the tax on net investment income, should be reversed. The net investment income tax results in fewer dollars available for scholarships, students, research, and college and university operating expenses.”

IRS data shows that in calendar year 2021, 33 institutions paid the tax. Assuming that reflects FY20, it is very likely that many more colleges and universities had to pay this excise tax in 2022, given market returns and the fact that many institutions had lower enrollments during the 2020-21 academic year due to the pandemic.


Liz Clark

Vice President, Policy and Research


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