Bryn Mawr, Haverford and Swarthmore no longer have to pay tax on their endowments, as detailed in the bill passed into law by Trump on July 4.
Known as the One Big Beautiful Bill, Trump’s reconciliation bill was passed by the House on May 22. It detailed steep changes to Medicaid, requiring enrollees under 65 to prove that they work, volunteer or go to school for 80 hours a month in order to receive insurance coverage. The bill also contained an estimated $186 billion in cuts to food benefits such as SNAP over the next 10 years, and further tax cuts from his 2017 bill.
The original bill that passed the House also initially proposed significant tax increases on the endowments of private colleges around the nation.
Bryn Mawr, Haverford and Swarthmore have endowment values of $1.2 billion, $702 million and $2.7 billion respectively (as of May and June 2024). Bryn Mawr and Swarthmore had previously been paying 1.4% in tax, as determined by Trump’s first term in 2017, though Haverford had not been paying any endowment tax. The three Tri-Co schools had also been part of a coalition of 25 small colleges fighting for a tax exemption due to the damaging impacts it would have on their operations. In the Philadelphia Inquirer, President Wendy Cadge of Bryn Mawr College stated “If enacted, some of the proposed endowment tax increases will undoubtedly diminish the ability of many colleges and universities to support students further, particularly those with financial needs, in addition to middle-class families, faculty, and the community.”
The original House bill proposed a maximum tax of up to 21% on the endowments on some of the richest schools (those with an endowment of over $2 million per student). It also initially proposed tax exemptions for religiously affiliated colleges and colleges that don’t receive federal aid. Alongside these tax increases, the originally proposed bill sought to penalize schools with a large number of international students by excluding them from the calculation of endowment per student.
However, once the bill went to the Senate, the Finance Committee reframed these tax rates.
They settled on an amended bill stating that schools with endowments between $500,000 and $750,000 per student would continue paying the 1.4% rate whereas schools with endowments between $750,000 and $2 million per student would pay 4%.
The highest tax would be applied to schools with endowments over $2 million per student but this decreased significantly from the original 21% to a lower but still significantly higher 8%.
The originally proposed exemptions for religious colleges and those not receiving federal aid were also cut from the bill by Senate Parliamentarian Elizabeth MacDonough due to their failure to pass the Byrd rule.
The Senate then settled on a final threshold that allowed colleges with fewer than 3,000 students to be exempt from all endowment taxes, regardless of the size of their endowments. This was a change from the previously proposed 500 students threshold. It was this final amendment made by the Senate to the original House bill that allowed the Tri-Co Colleges to become exempt from these tax increases. This threshold also meant that smaller, religious, conservative colleges would still be exempt from tax even though religious exemptions were cut from the final bill.
In a statement to the Inquirer once the final bill had allowed the college to be tax exempt, Cadge stated “While I continue to believe that taxing any college or university endowment is misguided public policy, I am grateful that the exemption granted to small colleges like Bryn Mawr means we can focus our endowment resources on where they matter most — on students and their futures”.
