The Trump administration plans to tax endowments at many private universities. This policy would shift the cost of tuition on students and their families, depriving many students of access to a university education at many private universities and colleges.

Universities and colleges “have pushed back against the tax, noting that they use their endowments to fund the education of poor and middle-class students,” according to The New York Times. The Trump administration’s proposed tax on endowments is potentially illegal, and will certainly be result in multiple lawsuits.

If the policy is implemented, it will directly impact millions of college and university students and their families, depriving them of access to higher education. The policy represents a further attack on higher education institutions, academic freedom, and democratic principles.

Universities and colleges use their endowments to provide scholarships to students, often spending around half of their endowments on financial aid to students. The rest of endowment funds are used to invest responsibly in the future of universities and colleges, including having “rainy day” reserves on hand to deal with crises (like the recent COVID pandemic).

“Of the $30 billion that schools spent in endowment funds in 2024, nearly half went to financial aid, according to an analysis by the National Association of College and University Business Officers.”

The New York Times points out that “Vice President Vance was a beneficiary of this need-based aid. He attended Yale Law School as a Marine Corps veteran with a financial aid package that he later wrote ‘exceeded my wildest dreams.'”

The Vice President now wants to deprive other military veterans, middle-class, and poor students of similar financial aid.

“Christopher L. Eisgruber, Princeton’s president, wrote in a recent message that 71 percent of students in this year’s freshman class received no-loan financial aid funded by the school’s endowment, with the average grant totaling $73,000,” according to The New York Times.

“‘This tax is a scholarship tax,’ said Steven M. Bloom, an assistant vice president at the American Council on Education, a large industry trade group that is opposing the proposal,” reports The New York Times.

“Williams College, a liberal arts school in Massachusetts, would be subject to at least a 14 percent tax. In an interview, its president, Maud S. Mandel, said the school devoted $92 million from its endowment this year to help over half the school’s student body.”

“‘Any tax on the endowment would have a direct impact on that,’ she said.”

Small liberal arts colleges like Grinell College (Iowa), Claremont McKenna College (California), Smith College (Massachusetts), Trinity University (Texas), Carleton College (Minnesota), DePauw College (Indiana), Reed College (Oregon), and Hillsdale College (Michigan) are all projected to be hit by the Trump administration’s tax on endowments.

Medical schools like the Mayo Clinic (Minnesota) and Baylor College of Medicine (Texas) are also projected to be taxed by the Trump policy.

The New York Times indicates that “in California, Pomona College’s vice president, Jonathan B. Williams, said the tax would cost the school $40 million a year, the equivalent of 460 full scholarships. Its enrollment is about 1,700.”

“‘This will shift the cost of tuition squarely on to families,’ he said.”

Saul, Stephanie and Steven Rich, “Republican Plan to Tax Elite Colleges Could Hit in Unexpected Places.” The New York Times (20 May 2025).