A new tax on university endowments is creating financial uncertainty for elite U.S. colleges, resulting in staff layoffs and hiring freezes. The tax, which was signed into law by President Donald Trump, will be implemented in 2026 and introduces a tiered taxation system. Wealthy schools will face significantly higher tax rates based on their endowment values per student, prompting concerns about reduced financial aid for low-income students as colleges allocate more funds to cover these taxes.
The new tax will charge an 8% rate at schools with $2 million or more in assets for each enrolled student, creating a tiered system.
Colleges like Harvard, Yale, and Stanford are citing the tax increase as a reason for staff layoffs and hiring freezes, which raises financial uncertainty.
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