Republicans' plans to target universities' finances

Politico

12-05-2025

Presented by Third Way
With help from Mackenzie Wilkes, Delece Smith-Barrow, Juan Perez Jr. and Benjamin Guggenheim
TAXES & PENALTIES — Congressional Republicans are eyeing a host of accountability measures for colleges and universities that could have a substantial impact on their finances.
— House Republicans are considering a significant expansion of taxes on university endowments, with some wealthier universities paying much larger tax rates, four people granted anonymity to speak candidly told POLITICO.
— Congress implemented the endowment excise tax for the first time in 2017, applying a 1.4 percent tax on endowment income for universities with at least $500,000 per student in endowment funds. But now Republicans have their sights set on much higher percentages.
— Under the proposed plan, endowments valued at $750,000 or less per student would be taxed at the current 1.4 percent rate on their investment income, according to two of those people. Endowments valued between $750,000 to $1 million per student would be taxed at a 10 percent rate and those greater than $1 million per student would be taxed at a 20 percent rate.
— House Republicans unveiled part of their tax plan on Friday, but it did not include specifics about the endowment tax. More details may be available by Tuesday, Benjamin Guggenheim and Brian Faler report.
— In the past, both Republicans and Democrats have seen endowment taxes as a means to encourage schools to use their resources to make higher education more affordable. This latest proposal, however, comes at a time when the administration has frozen millions in federal funding at various elite institutions and is threatening to yank Harvard's tax-exempt status.
— And an endowment tax isn't the only accountability measure being considered by Congress. The House Education and Workforce Committee has also included an accountability measure in its reconciliation bill often known as 'risk-sharing' in the policy world where institutions would pay penalties if their graduates have high rates of not repaying student loans.
— Proponents of the policy say that it encourages universities to have 'skin in the game,' while critics say it could deter colleges from offering programs for teachers or social workers, due to fear of incurring significant penalties.
— 'You can't really control what a student does when they leave an institution, so I understand where higher ed [institutions are] coming from,' said Steve Taylor, a policy director at Stand Together, a right-leaning advocacy group. 'But at the end of the day conservatives are not placing the full onus on institutions…but they are saying an institution has a role in ensuring that the programs they're delivering should position that student for a successful outcome.'
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Higher Ed
'EXCLUSIVELY ON MERIT' — The Pentagon sent a directive on Friday to the nation's military service academies directing them to end consideration for race, ethnicity or sex for admissions, stating it must instead be granted 'exclusively on merit.'
— 'This ensures only the most qualified candidates are admitted, trained, and ultimately commissioned to lead the finest fighting force in history,' the memo stated. 'Selecting anyone but the best erodes lethality, our warfighting readiness, and undercuts the culture of excellence in our Armed Forces.'
— This is hardly the first time the academies' admissions policies received national attention. In 2024, the Supreme Court rejected a bid to stop West Point's race-conscious admissions policy.
ADVICE FROM THE KING — Former Education Secretary and current SUNY Chancellor John King encourages colleges and universities fighting with the Trump administration over federal aid to admit missteps they've made while leading their students and to remind Congress that campus research can lead to breakthroughs in tech and health care, Delece Smith-Barrow writes.
— 'We should take seriously the critique from some on the right that there is sometimes a lack of viewpoint diversity on particularly elite college campuses, and we should as a higher education sector be diligent about creating opportunities for rich academic debate,' said King, who's also been reflecting on what it means to be an educator in his new book 'Teacher by Teacher.'
— 'At the same time, we need to make the case, particularly to Congress and to the public, that universities play a hugely important role in our economy…We need to remind people that in your cell phone are the product of thousands of different research projects at universities that have advanced technology, and we need to remind people that the treatment that they're getting, or their family members or loved ones are getting, at the hospital was discovered through university research.'
PK-12
BLOCK THE BLOCK GRANTS — Top congressional Democrats are urging the Education Department to deny state requests to block grant federal K-12 dollars under the Elementary and Secondary Education Act, Mackenzie Wilkes reports.
— The Education Department has received at least two requests, from Oklahoma and Iowa, asking the federal government for a waiver to allow the consolidation of funds under ESEA, also known as the Every Student Succeeds Act. Additionally, 12 states, including the aforementioned ones, have expressed interest block block-granting K-12 dollars. The department has some authority under federal law to grant waivers, but lawmakers caution the agency from flouting waiver restrictions related to the allocation and distribution of funds and civil rights requirements, among other things.
— 'Adherence to the statutory and regulatory requirements outlined in ESEA is not optional,' wrote Reps. Bobby Scott (D-Va.), Rosa DeLauro (D-Conn.) and Sens. Bernie Sanders (I-Vt.), Patty Murray (D-Wash.) and Tammy Baldwin (D-Wis.) in a letter to the department. 'We urge the Department to ensure that ESEA remains a robust mechanism for promoting educational equity and excellence, without compromising transparency, consistency, or fairness in its implementation.'
MENTAL HEALTH — Former Arizona Rep. Gabrielle Giffords wants Education Secretary Linda McMahon to meet with school shooting victims' families, as the assassination attempt survivor tries to coax the Trump administration into restoring $1 billion worth of federal mental health grants that officials elected to cut off last month, Juan Perez Jr. reports.
— 'Everyone wants kids to be safe in school,' Giffords wrote to McMahon on Friday in a letter obtained by Weekly Education. 'But I have serious concerns that your department's recent cuts have made our nation's classrooms significantly more dangerous. I ask you to reconsider before it's too late.'
— Federal grants boosted under the Bipartisan Safer Communities Act in the wake of a 2022 mass shooting at a Texas elementary school were meant to help states and higher education institutions train mental health professionals who could then work in local schools.
— The future of that funding is now uncertain, though it won renewed bipartisan support in the wake of the Robb Elementary School shooting when it was boosted by hundreds of millions of dollars under the most significant gun safety legislation approved by Congress in decades.
— The agency has said the funding conflicts with Trump administration priorities. A federal official declared last month that mental health grantees were either violating the letter or purpose of federal civil rights law, conflicting with the department's policy of 'prioritizing merit, fairness, and excellence in education' or using federal funds inappropriately.
— The department did not respond to a request for comment. Last month, the agency said it declined to continue funding the grants beyond their initial award terms. The department has also said it plans 'to re-envision and re-compete its mental health program funds to more effectively support students' behavioral health needs.'
Syllabus
— Following Trump crackdown, Colorado district approves trangender athlete ban. Chalkbeat Colorado.
— As 'Grading for Equity' movement grows, more teachers are pushing back. The Wall Street Journal.
— America's undocumented educators unsure of what's next under Trump. The 74.