The richest private colleges in the U.S. will see about $85 million less in government stimulus money to contend with the COVID-19 crisis.
Harvard, Princeton and Yale are among the wealthy institutions that would be affected because of a provision that singled them out. The American Council on Education, a trade group, estimated the loss for the group of about 30 schools that are subject to the college endowment tax.
The stimulus payments will be reduced by 50% under the legislation passed last month, which allocated about $20 billion for non-profit higher education institutions. The cut is being made as U.S. colleges and universities face financial turmoil with the pandemic leading to a drop in enrollment, empty dorms and increased expenses.
"We're getting this weaponization of tax and funding policy against institutions that are seen as affluent," said Steven Bloom, the American Council's assistant vice president for government relations. "They're seeing financial challenges too. They're not immune to it. They're taking steps to cut costs because they have lost revenue and increased financial burdens across the board."
Slashing the stimulus is another blow for colleges that in 2017 were hit with the federal endowment tax. The levy, passed with the Republican tax cuts, amounts to 1.4% of net investment income. The wealthiest private schools, those with endowment assets of more than $500,000 a student and more than 500 tuition-paying students, are subject to it.