Private universities are panicking over a GOP-backed proposal to raise taxes on their investment profits, which could cost schools like Harvard and Yale hundreds of millions of dollars annually.
The move is part of a broader effort by the Trump administration to hold elite institutions accountable for mismanagement and campus extremism.
Key Facts:
- The House-passed bill raises the endowment tax rate on certain private universities from 1.4% to 21%.
- Colleges with endowments over $2 million per student would pay the highest rate—matching the corporate tax rate.
- Swarthmore College, with a $2.7B endowment, would face a 14% tax; Harvard and Yale would hit the 21% bracket.
- Yale could owe $690 million in taxes on endowment earnings under the new rate, up from $46 million.
- Harvard has lost federal funding and is under scrutiny for debt reliance and poor endowment liquidity.
The Rest of The Story:
House Republicans are pushing forward a tax hike on elite private university endowments as part of President Trump’s sweeping tax-and-spending bill.
The aim is to address what they see as widespread abuse of tax privileges by institutions that behave more like hedge funds than educational organizations.
Under the bill, private colleges with large per-student endowments would see tax rates as high as 21%, equivalent to the corporate rate.
Public and religious schools are exempt.
Swarthmore, Yale, Harvard, MIT, Princeton, and Stanford are among the hardest hit.
These institutions rely heavily on endowment income to support operations, scholarships, and expansion projects.
Yale and Harvard are pushing back.
Yale’s president labeled the bill an “unprecedented threat,” while critics like investor Bill Ackman warn that Harvard is already financially unstable, citing excessive debt, poor investment performance, and endowment overvaluation.
Commentary:
It’s no surprise these elite universities are panicking.
For years, they’ve enjoyed massive tax privileges while charging sky-high tuition and building multibillion-dollar endowments—often tax-free.
At the same time, these institutions have drifted far from their educational mission.
Many now function more like investment houses than learning centers, using hedge fund-style strategies to grow their wealth.
Yet, when held accountable, they cry financial hardship.
Many of these colleges are increasingly populated by foreign students—who pay more but often import radical ideologies hostile to American values.
This shift has turned these schools into hotbeds of anti-Semitism and anti-American sentiment.
Meanwhile, their financial models are crumbling.
Harvard, despite claiming a $53 billion endowment, borrows money every six months just to keep the lights on.
As investor Bill Ackman put it, “With a $53 billion endowment, the reality of Harvard is it’s in a financial crisis right now… Their endowment is highly illiquid, poorly invested… It’s probably a $40 billion endowment.”
Bill Ackman: "One thing I believe is that the private equity, venture capital and real estate portfolios are mismarked"
Ackman on Harvard and Yale endowment's exposure to private equity and VC. One of the best clips I have seen
From his recent interview at University of Austin pic.twitter.com/MZN2CpITDN
— Boring_Business (@BoringBiz_) May 22, 2025
This isn’t just poor planning—it’s gross mismanagement.
And now that federal grants and special tax treatment are on the chopping block, these schools are realizing they’re not invincible.
It’s long past time to stop subsidizing this madness with taxpayer money.
These elite schools are failing their students, betraying their country, and mismanaging their fortunes.
Let them face the same scrutiny and tax treatment as any other powerful corporation.
The Bottom Line:
Republicans are pushing to level the playing field by ending the special tax treatment for wealthy private universities.
The schools are crying foul, but the truth is their bloated endowments, mismanagement, and ideological corruption have caught up with them.
This proposal sends a clear message: no more taxpayer handouts for elite institutions that fail to serve America’s interests.
If Harvard and Yale want to operate like businesses, they can be taxed like them too.
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