How Trump’s new tax rate on college endowments is threatening university jobs and financial aid

A new tax on university endowments is creating financial strain for the wealthiest U.S. colleges. This tax, signed into law by President Trump, will take effect in 2026 with a tiered system. Elite institutions like Harvard, Yale, and Stanford are already implementing staff layoffs and hiring freezes, citing this tax as a contributing factor. Experts warn that increased tax spending could lead to reduced financial aid for lower-income students. The tax targets private colleges with at least 3,000 students and significant endowment assets per student. Schools with over $2 million in assets per student will face an 8% tax rate. This measure is expected to affect about a dozen universities, with several facing substantial new tax burdens. Colleges typically use endowment earnings for financial aid, research, and faculty support. The tax is adding to existing financial pressures, including reductions in federal research grants. While these institutions remain strong, the tax and other funding challenges may negatively impact students and university operations.