MIT, Yale Face Endowment Tax Hike While Notre Dame Scores Break

The Massachusetts Institute of Technology said a Republican plan to raise taxes on college endowments would threaten US interests.

“A tax of this magnitude would seriously damage our ability to conduct research that strengthens our nation’s security and economic competitiveness,” Kimberly Allen, a spokesperson for MIT said in an emailed statement. “It’s basically a tax on national research and student aid, and at MIT alone it would cut hundreds of millions of dollars from our budget each year.”

Republican lawmakers on Monday proposed to significantly increase taxes on many of the richest US universities, broadening a fight between the Trump administration and elite higher education.

Private colleges and universities with at least 500 students and endowments exceeding $2 million per student would pay a rate of 21% on net investment income under a bill released Monday as part of the House’s plan to extend the 2017 tax cuts. That’s up from the current tax of 1.4%.

The Maclaurin Buildings on the Massachusetts Institute of Technology (MIT) campus in Cambridge, Massachusetts, on Dec. 12, 2023.

Photographer: Mel Musto/Bloomberg

MIT, along with Harvard, Princeton, Yale and Stanford have endowments that would meet this threshold, according to data from the 2024 NACUBO-Commonfund Study of Endowments. The University of Notre Dame’s nearly $18 billion fund would have also faced a higher levy but the bill provided an exemption to religious institutions.

Read More: Notre Dame Already Won the Money Game in Battle With Ohio State

“We are grateful that Congress has recognized the unique and important contributions of faith-based institutions like ours, and we look forward to working with members as the current legislation moves forward,” a spokesperson for the Catholic school said in an emailed statement.

A spokesperson for Princeton didn’t have an immediate comment on the increase, but President Chris Eisgruber said earlier this year that a “larger endowment tax would damage higher education and our country.”

Read More: House Tax Bill Calls for $30,000 SALT, Omits Millionaire Tax (1)

Other wealthy schools will also be hit with tax increases under the plan, albeit at lower rates. Colleges with endowments over $750,000 to $1.25 million per pupil will pay a 7% tax, while colleges with endowments over $1.25 million per student but below $2 million would pay 14%.

The Trump administration has already blocked about $2.2 billion in federal funding for Harvard, and Princeton has also seen federal research funding frozen. On Tuesday, the administration said it would terminate another $450 million of grants from Harvard. The White House has targeted schools for failing to address antisemitism on campus, but has expanded its criticisms to include diversity efforts and left-leaning biases.

(Updates with comment from MIT spokesperson as well as a statement from Notre Dame.)

To contact the reporters on this story:
Amanda Albright in New York at aalbright4@bloomberg.net;
Janet Lorin in New York at jlorin@bloomberg.net

To contact the editors responsible for this story:
Danielle Moran at dmoran21@bloomberg.net

Brooke Sutherland

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