ST. LOUIS — Washington University in ӣƵ would lose up to $60 million a year if federal officials approve a significant tax hike on the country’s wealthiest universities.
The most recent proposal for a heightened tax on university endowments tops out at a rate of 8%, adding to the avalanche of threats to higher education as the federal government works to slash research funding and universities accountable.
Investment income from WashU’s $12 billion endowment would be taxed at 4% a year under the U.S. Senate’s proposed tiered system for excise tax rates. The tax represents a small increase from the 1.4% tax that WashU started paying after the first administration of President Donald Trump enacted the Tax Cuts and Jobs Act in 2017.
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But Julie Flory, the university’s spokesperson, said the higher proposed tax would cost the private university between $50 million and $60 million a year, or the equivalent of 700 to 900 full-ride scholarships for undergraduates.
Flory said no one was available for an interview about the tax’s possible effect on WashU.
The policy change would come through the GOP’s “One Big Beautiful Bill Act,” which the Senate is expected to send to the president’s desk by early July.
A university’s endowment is a collection of financial gifts over time. A pool of 4,410 individual funds makes up WashU’s endowment, the university last fiscal year, each with legally binding purposes designated by donors, ranging from student financial aid to research.
Universities invest their endowments and take a cut of the returns each year. The annual distribution of WashU’s endowment is its third-largest revenue stream and accounts for more revenue than tuition.
WashU’s endowment is one of the largest in the U.S. — 13th in the nation — according to the , surpassing that of Vanderbilt, Northwestern, and Cornell universities in fiscal 2021.
Because of the size of its endowment, WashU would be the only local university affected by the increased tax, if it’s passed.
Webster, Lindenwood and Maryville universities do not fall into the government’s criteria for applicable institutions based on their endowment funds per student.
The plan also exempts religious colleges and public institutions, leaving out ӣƵ University and University of Missouri-ӣƵ.
Monica Obradovic – 314-340-8048 mobradovic@post-dispatch.com
