The “Massive, Lovely Invoice” added further taxes on a small set of universities. Now finances cuts have hit campuses throughout the Ivy League and elsewhere.
Banners hanging from Memorial Church on the Harvard College campus in Cambridge, Massachusetts.
(Sophie Park / Getty)
Over the summer season, the Trump administration held an uncommon Independence Day celebration on the White Home. A dwell band warmed the group with renditions of Chaka Khan’s “Ain’t No person” and Pharrell Williams’s “Completely satisfied” earlier than the president emerged from the first-floor balcony of the chief residence. Supporters sporting crimson MAGA caps seemed on as he signed the Massive Lovely Invoice into legislation beneath the South Portico’s white columns. He flashed the doc, exhibiting his Sharpie signature, fulfilling a number of marketing campaign guarantees, together with what he referred to as the most important tax cuts within the nation’s historical past: “We’ve delivered no tax on ideas, no tax on extra time, and no tax on Social Safety for our nice seniors.”
However the president by no means talked about that the invoice would reconfigure the steadiness sheets of essentially the most elite universities in the USA. And, on New Yr’s Day, the schools topic to the Massive Lovely Invoice’s greater charges started going through the most important tax hikes of their historical past.
Ten universities have been hit the toughest, as Princeton, Yale, and MIT brace for an 8 p.c endowment tax, and Stanford, Harvard, Notre Dame, Dartmouth, Rice, Vanderbilt, and the College of Richmond face a 4 p.c tax, according to an analysis from Forbes.
The choice was decided by endowment dimension per pupil: Faculties with greater than $2 million per full-time tuition-paying pupil face the 8 p.c price, whereas these between $750,000 and $2 million per pupil pay 4 p.c. 5 different universities—Emory, Duke, Washington College in St. Louis, Penn, and Brown—will proceed paying the unique 1.4 p.c price. Harvard and Yale every anticipate roughly $300 million in further annual prices, and, in whole, billions will go from elite campuses to Washington yearly.
However further income isn’t fairly the purpose. The Massive Lovely Invoice narrowed the endowment tax base, shifting the burden from 56 non-public universities that paid a 1.4 p.c levy beneath the Tax Cuts and Jobs Act to simply 15 establishments going through the brand new tiered charges.
Reasonably than broadening the bottom, the invoice concentrated greater taxes on a small set of elite universities which have carried out analysis resulting in a few of the most vital scientific breakthroughs, together with mRNA vaccine know-how, MRI machines, pacemakers, and insulin remedy for sufferers with diabetes.
Present Concern
That actuality has led to interpretations that the Massive Lovely Invoice’s endowment tax is punitive. Now finances cuts are hitting universities throughout the Ivy League and elsewhere.
Why goal these specific establishments with an elevated endowment tax? The colleges share a number of traits: huge endowments (Harvard’s exceeds $50 billion), extremely selective admissions processes, perceived ideological homogeneity, and prominence in shaping nationwide elites. However these colleges are additionally among the many many universities that the president has spent years attacking as bastions of left-wing thought—although he, Vice President JD Vance, and Treasury Secretary Scott Bessent, all three attended Ivy League colleges.
The selection of targets additionally displays political calculation. Not like state analysis universities with highly effective congressional delegations defending them, these non-public establishments have fewer pure political defenders and make symbolically potent targets for a populist agenda.
Princeton, for instance, will doubtless face a tax legal responsibility exceeding $223 million this 12 months, in line with Wellesley School economist Phillip Levine, a senior fellow on the Brookings Establishment. Early final 12 months, Levine issued a warning about college presidents: “They don’t acknowledge a meteor is about to hit.”
“Princeton has requested its departments to make 5-to-10 p.c finances cuts throughout the board,” in line with Charlie Yale, a sophomore from Omaha, Nebraska, finding out historical past at Princeton. However he added that the college has thus far executed a superb job stopping these cuts from instantly affecting pupil life. “There are, for instance, fewer occasions with free meals,” he stated, “however within the context of cuts to local weather analysis or threats to worldwide college students, I don’t suppose it’s as dangerous because it may very well be.”
Different departments have been hit more durable. Regardless of not too long ago shedding a number of prime college, the economics division isn’t hiring this 12 months, in line with Owen Zidar, a professor of economics and public affairs at Princeton. “We’re additionally planning to shrink the dimensions of the PhD program from round 23 college students to round 19 because of finances pressures,” he stated, which implies “much less analysis, fewer scientists, and fewer innovation and productiveness development in the USA.”
These cuts are actually taking part in out, in several types, throughout the Ivy League.
At Yale, President Maurie McInnis introduced a finances adjustment, by imposing a 5 p.c discount in non-salary bills, which account for roughly one-third of the college’s spending. In Yale School, college students observed the shift in monetary support for undergraduate summers and examine overseas. “To compensate for the endowment tax, Yale has been compelled to make finances cuts to undergraduate pupil life,” stated Alex William Chen, a sophomore finding out historical past and political science and the speaker of the Yale School Council Senate. The college “has slashed funding and restricted the makes use of of the Worldwide Examine Award,” stated Chen, “which beforehand enabled greater than 50 p.c of Yale college students—the share of the college receiving monetary support—to take part in life-changing examine overseas experiences.”
As certainly one of Yale’s highest-ranking pupil leaders, Chen has begun organizing the scholar response. “I made a decision to face up for my classmates. Our petition, which almost one in 4 Yale college students have signed in three weeks, is a push to reject the premise that the required fiscal aid for Yale’s endowment tax recalibration should come from denying present and future college students on monetary support an array of studying alternatives,” Chen stated. The petition, he added, is on its solution to turning into essentially the most signed in Yale’s current historical past.
“This 12 months, not solely are our regular requests being denied by the administration, however so are all of our smaller requests,” stated Micah Draper, Yale’s sophomore class president. He criticized the Yale administration for failing to match different Ivy League colleges’ pupil monetary support whereas attributing the brand new funding cuts to the Trump administration’s endowment tax. “I do know that that is due to the current enhance within the tax on our endowment,” Draper stated. “Throughout a traditional 12 months, lots of our college students’ wants may very well be simply met, however now the tax serves as a barrier for support to achieve those that want it most.”
These taxes didn’t emerge out of nowhere. In 2023, earlier than it was even clear who the following president could be, the Heritage Basis printed “Undertaking 2025,” an agenda for the following Republican within the White Home. “Reasonably than persevering with to buttress a better schooling institution captured by woke ‘diversicrats’ and a de facto monopoly enforced by the federal accreditation cartel,” reads a piece on the Division of Training, “federal postsecondary schooling coverage ought to put together college students for jobs within the dynamic financial system, nurture institutional range, and expose colleges to higher market forces.”
In different elements of Undertaking 2025, the plan lays out an agenda the place commerce colleges could be bolstered. Trump has already moved on this: In September, he previewed a $500 million deal on commerce colleges with Harvard, in line with CNN. This aligns with shifting public sentiment: In 2013, 70 p.c of adults surveyed by Pew stated a university schooling was “crucial.” This 12 months, it was simply 35 p.c.
At Yale, considerations concerning the endowment tax lengthen past the cuts themselves. Daniel Martinez HoSang is an American research and political science professor who serves on the chief committee of the American Affiliation of College Professors at Yale. “I feel there’s a rising concern amongst college at Yale and different schools and universities that the issue isn’t a recognition concerning the disaster we’re prone to face,” he instructed Connecticut Public Radio final month. “It’s very, very uneven the ways in which college, college students, workers, and others are allowed to take part in selections about what the affect and penalties of those finances reductions will likely be.”
Yale owns roughly $4.3 billion in New Haven actual property. As a result of it’s a nonprofit, the college is tax-exempt, and the town can not acquire property taxes on that land. That is additionally true of different Ivy League campuses. Yale does, nonetheless, present annual funds in “lieu” of property taxes; the college has a $135 million, multi-year dedication to New Haven.
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“It will be fairer for universities like Yale to be taxed by localities like New Haven, which don’t tax them however do present policing, sanitation, public colleges, and a lot extra,” stated Jim Sleeper, a former Yale political science lecturer. “In comparison with that uneven tradeoff, the federal authorities’s taxing of universities’ endowments could be extortion pushed by Trump’s ideologically motivated marketing campaign towards liberal schooling.”
Not like Yale and Princeton, MIT has not tightened its budgets, nor has it framed spending cuts as inevitable—at the least not but.
In a letter despatched on November 19, 2025, MIT president Sally Kornbluth recognized three levers the college would pull to assist shut the finances hole created by the brand new endowment tax: growing income by means of fundraising; lowering prices by not renewing leases on unused workplace house and forgoing advantage wage will increase for workers incomes greater than $85,000; and “rebalancing,” by urging tutorial departments to make use of beforehand underutilized gifted funds.
Harvard, Yale, Princeton, MIT, and Stanford have every begun responding to the brand new endowment tax in a different way. But they nonetheless share at the least one commonality: They’re extra inexpensive for the common American household than a typical state college or liberal arts faculty, they usually have made their dedication to monetary support clear.
However what, precisely, the scholar expertise will appear to be in 5 years, after as a lot as $10.5 billion has been transferred to the federal authorities, continues to be being labored out by college administrations. “We love our faculty,” stated Draper. “However this isn’t a one-year drawback. It is going to be right here lengthy after my classmates and I graduate.”
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