University Endowments Will Be More Heavily Taxed and Student Federal Borrowing Will Be Capped

The approved Trump administration domestic policy bill will expand taxes on endowments that universities often use for financial aid (typically about 5%), cap the federal amount students can borrow for graduate programs, and allow students in short-term work training programs in community colleges to become eligible for Pell Grants. Also, the bill would "make college less affordable," said Lynn Pasquerella, president of the American Association of Colleges and Universities. Meanwhile, republicans said that the bill — dubbed "The Big, Beautiful Bill — imposes accountability on a sector that has failed to police itself. More heavily taxed university endowments fulfill a Trump campaign promise to target the nation’s wealthiest schools, like Harvard, Columbia, and the University of Pennsylvania, among others. To date, this campaign has resulted in reduced research grants and made it more difficult for international students to enroll. Universities like Harvard and Princeton, which have endowments of $2 million or more per student, would face an 8 percent tax on investment income. It’s a smaller amount than the 21 percent proposed initially in the House bill or the 35 percent that Vice President JD Vance suggested in 2023 as a senator. The student loan changes are expected to save the government over $300 billion in a decade, according to a Congressional Budget Office estimate. "By reducing borrowing availability, we break the cycle of debt, making higher education more accessible for all Americans," the Trump administration said in a statement. The bill places restrictions on how much money graduate students can borrow from the federal government to pay for school. Students won't be able to take out more than $100,000 for a master’s degree and over $200,000 for doctoral, medical, or professional degrees.