Education experts say it will stick colleges with burdensome taxes and strip away critical student protections, but the Senate version did soften some of the House’s most damaging proposals.
The Senate on Tuesday passed its version of President Trump’s “big, beautiful” tax and budget bill by a 51-50 vote, with Vice President JD Vance breaking the tie. The 940-page bill, which now returns to the House for final approval, contains a number of provisions related to higher education that seem likely to weaken nonprofit colleges’ finances, while making it more difficult for students to access financial aid and student loans. Although some House Republicans are complaining about Senate changes from the bill they passed back in May, the betting is that under pressure from Trump, they’ll accept the Senate’s version.
“With the goalpost of July 4th set by the President, it’s likely the Senate’s version will hold mostly intact,” says Michael Itzkowitz, founder of the higher education consultancy HEA Group and a former official in the Obama education department. “There’s just not too much time for the House to make any large changes at this point.” If House passage of the bill is delayed, it won’t be education-related provisions that hold it up, says Jon Fansmith, senior vice president for government relations and national engagement at the American Council on Education. The Senate bill’s deeper cuts to Medicaid and bigger increase in deficit spending may worry House Republicans, he says. “They may not be able to get this over the finish line tomorrow. And then if that doesn’t happen, I think everything goes back on the table,” says Fansmith. “But their goal is to try and move quickly.”On The College Endowment Tax
One of the biggest changes between the Senate bill and the House-passed version is a change to the excise tax proposal on the investment income of college endowments. The initial House-passed bill increased the existing 1.4% tax to as high as 21% for the richest institutions. The Senate bill scales that back, and outlines an excise tax structure that would levy an 8% tax on endowments worth more than $2 million per student, a 4% tax on endowments worth between $750,000 and $2 million per student, and a 1.4% tax on endowments worth between $500,000 and $750,000 per student. Colleges would only be subject to the tax if they enroll at least 3,000 tuition-paying students (up from the current cut-off of 500 students), and if at least half of those students are located in the United States. Unlike the House bill, the Senate version doesn’t punish schools for having a high number of foreign students by excluding them from the calculation of endowment per student. The Senate parliamentarian spiked the part of the proposal that would exempt religious institutions from the tax, which, Fansmith says, was part of an effort to exempt the very conservative Hillsdale College from the endowment tax.
