Latest news with #endowmenttax
Fox News
14 hours ago
- Business
- Fox News
Harvard Kennedy School announces layoffs after Trump cuts billions in funding
The Harvard Kennedy School of Government will lay off staff after federal funding cuts and endowment tax threats on Wednesday, according to an email from the dean of the school that was obtained by Fox News Digital. Without mentioning the Trump administration directly, Harvard Kennedy School Dean Jeremy M. Weinstein announced in an email to faculty and staff that the cuts were in response to "unprecedented new headwinds" creating "significant financial challenges." These included a "substantial proposed increase in the endowment tax" and "massive cuts to federal funding of research." He also cited the impact on international student enrollment after the administration eliminated the student visa program due to "pro-terrorist conduct" at Harvard's campus protests. According to the Kennedy School, international students made up 59 percent of the school's student body last year, and 52 percent on average in the past five years. The Kennedy School has been planning for budget cuts since February, but the White House's recent actions appear to have exacerbated the circumstances. The Trump administration froze $2.2 billion in funding to the university and threatened to revoke its tax-exempt status due to its handling of antisemitism on campus in the wake of the October 7 terror attacks on Israel by Hamas. The Department of Education's Task Force to Combat Anti-Semitism released a statement on May 13, citing recent reporting that "has exposed the Harvard Law Review's (HLR) pattern of endemic race discrimination when evaluating articles for inclusion in its journal." The findings resulted in the Trump administration cutting an additional $450 million in grants from the university. In addition to layoffs, Harvard has implemented "important steps" to reduce costs across the Kennedy School, Weinstein said, such as pauses in hiring and merit-based pay, ending a lease on the first floor of an office building, halting "non-urgent" construction and renovation projects, and "reducing spending" across each core department. "Unfortunately, those efforts alone will not be enough to address our current financial challenges," the dean wrote. "As a result, we need to lay off some members of our team and restructure other positions to ensure the long-term financial future of the Kennedy School." Weinstein stated that managers would inform staff affected by the layoffs on Wednesday afternoon. "This is an extremely difficult moment, and one that we did everything possible to avoid," Weinstein added. "I am truly sorry that we need to take this step as we navigate unprecedented challenges as a School and University," Weinstein wrote, while also noting that the administration's actions caused "even greater financial uncertainty." The Harvard Kennedy School declined to disclose to Fox News Digital how many staff members were laid off. The Harvard School of Public Health implemented layoffs in April and other schools are considering cutting staff as well, the Harvard Crimson reported Thursday. The Trump administration did not immediately respond to Fox News Digital's request for comment.
Forbes
17-06-2025
- Business
- Forbes
Senate Proposes A Smaller Increase For University Endowment Tax
The Senate version of a proposed tax hike on private university endowment earnings offers some ... More relief to colleges. The U.S. Senate Committee on Finance has proposed a smaller increase to the endowment tax on private universities and colleges than the reconciliation tax and spending bill previously passed by the House of Representatives. According to the committee's plan, the top rate would be 8% on endowment earnings versus the 21% that had been set by the House. The Senate version retains the House's tiered structure that specifies that the tax rate grows as the size of the endowment per student increases, and it also includes a similar methodology for calculating the tax rate. Both plans raise the tax on the endowment earnings of private colleges and universities from its current 1.4% flat rate. Currently, a few dozen private universities with at least 500 full-time equivalent students and an endowment worth at least $500,000 per student are subject to a 1.4% tax on endowment earnings, a levy that was passed during Trump's first term. Under the new proposals, the increases would be tiered. Both plans also change how the number of enrolled students is calculated. By excluding foreign and undocumented students from the count, the proposals increase both the number of institutions subject to endowment taxes and the number who would have to pay a larger rate. Religious colleges would be exempted from the tax under both proposals, but what schools qualify as being religious will likely be debated. One difference in the two plans is that the Senate would exempt colleges that don't accept federal financial aid from paying the tax. The House version does not include that exemption. The Senate's softening of the endowment tax increase will be seen as an improvement for institutions, although it fails to provide all the relief they have been lobbying for. Schools have been trying to persuade legislators to lighten up on the tax increase, arguing that if it becomes law, it will result in the reduction of hundreds of millions of dollars in financial aid for students. According to the 2024 NACUBO-Commonfund Study of Endowments, the largest share of endowment spending — 48.1% — goes to provide financial aid through institutional scholarships and tuition discounts. Should endowment taxes increase, dozens of prominent institutions may need to reduce their spending on helping financially needy students be able to attend college. "The Senate version of the so-called endowment tax is better, but it's still bad and harmful tax policy,' said Steven Bloom, American Council on Education assistant vice president of government relations, according to Inside Higher Education. 'They're going to take money that would likely have been devoted to financial aid and research and other academic purposes on campus, and they're going to send it to Washington, where it's used largely for purposes unrelated to higher education.' Expect colleges and universities to continue to press legislators for modifications to the tax hike. Among the alternatives they have suggested is a promise to spend more of their endowment's earnings on student financial aid in exchange for a lower tax rate. Other have pitched the idea that small colleges should get a break on how much they are required to pay or that the rate should be adjusted based on the number of students from low-imcome families that are enrolled. The House and Senate will need to iron out the discrepancies in their two versions of the overall reconciliation bill later this summer. The two packages involve major differences in policy that go far beyond disagreements over the endowment tax, making it increasingly unlikely that final legislation will be enacted by the target date of July 4.
Associated Press
06-05-2025
- Business
- Associated Press
A tax on college endowments began in Trump's first administration. It could soon rise
WASHINGTON (AP) — A tax on the endowments of America's wealthiest colleges began during President Donald Trump's first administration, collecting 1.4% of their investment earnings. Under Republican proposals on Capitol Hill, that rate could increase by tenfold or more. As Trump spars with prestigious colleges he accuses of 'indoctrinating' students with leftist ideas, calls to raise the tax have gained momentum. Republicans have questioned whether colleges with huge endowments — tens of billions of dollars, in some cases — should be entitled to tax breaks that are not offered to businesses. Proposals to increase the tax have come as the House looks to cut or offset $1.5 trillion in spending as part of the president's sweeping tax bill . Colleges say the proposed increases would take money that otherwise could go to financial aid and other support for students. The American Council on Education, which lobbies on behalf of college presidents, calls it a 'tax on scholarships.' What is the endowment tax? In 2017, Congress passed the 1.4% tax on wealthy colleges' investment earnings. It applies to colleges with at least 500 tuition-paying students and endowments worth at least $500,000 per full-time student. Before that, colleges weren't taxed on their endowment income. The tax reflected a sentiment that some colleges were too concerned with generating investment income, with huge endowments that operate like hedge funds. Critics pointed to colleges like Harvard , Yale and Stanford, with tens of billions of dollars. Harvard and dozens of other schools opposed the tax, calling it 'an unprecedented and damaging tax on the charitable resources' of universities. How does the tax work? Those hit by the tax include big Ivy League schools along with smaller liberal arts colleges that have accrued large endowments. Endowments are made up of donations that are invested to maintain the money over time. Colleges often draw about 5% of their investment earnings every year to put toward their budgets. Much of it goes toward student financial aid, along with other costs like research or endowed faculty positions. The 1.4% applies to those investment earnings. In 2024, Harvard was taxed more than $40 million. For some smaller schools, the bill was closer to $1 million. A relatively small number of schools are subject to the tax. In 2023, the tax generated $380 million from 56 colleges. Would the new tax affect other nonprofits? Not directly. The proposed tax increase applies only to certain colleges and universities and not other nonprofit organizations. But in the past, some colleges have argued that any endowment tax threatens the tax-exempt status of other charitable groups. Some say a tax increase would chip away at the idea that colleges provide a public benefit that deserves to be protected from taxation — a principle that applies to other tax-exempt groups. What's being proposed? House Republicans already were considering a hike in the tax on college endowments' earnings from 1.4% to 14% as part of Trump's tax bill. As the president raises the stakes in his fight with Harvard and other Ivy League schools, lawmakers are floating raising the rate as high as 21% in line with the corporate tax rate. It appears no decisions have been made. A separate proposal being looked at would expand the number of schools subject to the tax. It would change the calculation used to determine if a school has $500,000 per student, counting only U.S. citizens and residents. If approved, roughly a dozen additional colleges would be subject to the tax. ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
