The Trump Administration will have four main weapons, one that will target wealthy private universities, the others that will affect all colleges and universities to varying degrees. They are (1) taxing endowments; (2) adding conditions to eligibility for federal funding; (3) investigating universities for Title VI and other civil rights violations (e.g., using race in employment decisions), with possible Justice Department action and loss of federal funding; and (4) changing accreditation standards. Some of (2) will be tied to (1), so I'll treat those together, although access to federally funded student loans and federal research funding is implicated under the others as well.
Targetting private, secular universities with large endowments
(1) Endowment Tax. The 2017 Trump tax cuts already introduced a tax of 1.4% on net investment income from endowments for schools with at least 500 tuition-paying students and assets valued at over $500,000 per student. This affected only about three dozen schools, although with more moving into that category every year. The two main lines of attack here would involve increasing the tax rate and/or expanding the number of schools affected by the tax. So, for example, Ohio Republican Representative David Joyce has introduced a bill that would raise the endowment tax to 10% while lowering the threshold for taxation to endowments valued at only $250,000 per student. (Georgia Republican Drew Ferguson proposed a bill excluding non-US citizens/permanent residents from the "per student" calculation!) Perhaps most notably Senator (soon to be Vice-President) J.D. Vance introduced a bill that increases the endowment tax to 35% for private, secular institutions with at least $10 billion (which conveniently exempts Notre Dame, the only non-secular private institution which is that rich).
And it gets worse: Senator Tom Cotton and a California Republican in the House have introduce the "Woke Endowment Security Tax" which imposes a one-time tax of 6% on the entire 2022 assessed value of endowments at secular, private institutions worth at least $12.2 billion. This kindly exempts the University of Chicago, but targets at least Harvard, Yale, Princeton, Stanford, MIT, Penn, Northwestern, Columbia, and Washington University in St. Louis (Sen. Cotton's office says it will also affect Cornell, but I'm not sure where those numbers are coming from). On this proposal, Yale would have to make a one-time payment of about $2.5 billion to the federal government. Even Yale would find that difficult to pay without a firesale of assets, I expect.
What is a certainty is that the endowment tax will go up, and it will probably be applied to more schools. For the super wealthy (like Harvard, Princeton, Yale, Stanford, MIT) this will have minimal effects; for the rich but less wealthy (like Northwestern, Chicago, Cornell, Johns Hopkins etc.) this will have tangible effects on budgets and perhaps academic programs. (In 2017, Congress also toyed with taxing educational benefits offered by universities to faculty and staff; that failed then, but I wouldn't be surprised if came back now.)
(2) Endowments and federal funding: Various proposals are floating around that would limit federal funding for schools subject to the endowment tax: this includes limiting "reimbursement for facilities and administration costs to not more than 30% of an award" from the NIH; eliminating all reimbursement for facilities and administration, or indirect costs, on all research grants to universities with endowments over $5 billion, with an 8% cap on these reimbursements for schools with endowments in the $2-5 billion range ("Wealthy Universities Act" introduced by Senator Lee (R-Utah) and Representative Gallagher (R-Wisconsin).
There are more radical proposals out there. Rep. Elie Crane (R-Arizona) introduced a bill with the actual title, "No Taxpayer Funding for Ivy League Schools Act," that bans all institutions, public and private, with endowments over $5 billion from receiving any federal funds, except for projects of "critical national interest" (e.g., military-related research I suspect). Any bill that targets public universities will be dead on arrival, since not even the most extreme Republican Senators are likely to screw over their state schools. Rep. Chip Roy (R-Texas) recently added an amendment to an appropriations bill that would prohibit any school subject to the endowment tax from receiving federal funding for student aid or from the National Institute of Health, among others. I don't expect the most draconian proposals to prevail, but I would not be surprised at all if wealthy private universities face restrictions on their claims for incidental costs on federal grants--a non-trivial extra cost for those schools.
(3) Endowments and tuition: Senator Rick Scott has introduced legislation that would require all institutions (public and private, secular and non-secular) with endowments of over $1 billion to discount cost of attendance for students: for endowments between $1-5 billion, the discount would have to be 25%; for schools with endowments between $5-10 billion, a 50% discount; for those with more than $10 billion, a 75% discount. I think this is less likely to get traction, since it will target public universities (which will cost you votes from even Republican Senators in states like Texas); and even if it only targetted private universities, it seems too easy to "game" (just jack up tuition dramatically, then discount back to the amount you wanted to charge). They might be able to get around the risk of gaming by inserting various indexed measures for tuition, tied to the rate of inflation, or something like that.
The net effect of these moves will be to reduce the research capabilities of elite private universities; at the extreme, it will force schools to stop faculty hiring, freeze salaries, etc.
Title VI
As the Biden Department of Education explains:
Recent concerns have emerged regarding how colleges’ responses to anti-Jewish and anti-Arab incidents on campus can impact their eligibility for federal funding.
Swift and productive responses are essential for fostering an inclusive and safe learning environment, and failure to sufficiently address such incidents and effectively communicate them to the campus community may have far-reaching consequences.
If a college or university receives federal funding, Title VI of the Civil Rights Act of 1964 (Title VI) protects students from discrimination, including harassment, based on a student’s actual or perceived shared ancestry or ethnic characteristics, or citizenship or residency in a country with a dominant religion or distinct religious identity.
Institutions that neglect to effectively address on-campus anti-Jewish or anti-Arab harassment or discrimination risk violating Title VI if these actions created a hostile environment that limited or prevented students from accessing or participating in their education.
When relevant complaints are filed, the U.S. Department of Education’s Office for Civil Rights (OCR) may investigate and conduct comprehensive reviews to determine if the institution’s response is in compliance with Title VI.
If it is found to be noncompliant, a resolution will be developed by OCR that describes the necessary changes the institution should make. If the terms of the resolution are not met, that institution may face penalties, including the loss of Title VI funding.
We have already seen the weaponization of Title VI under Biden, including making the private and lawful political speech of faculty grounds for action. The recently issued Republican report on alleged anti-semitism on college campuses is indicative of what they will be looking for come January. To make matters worse, Democratic Majority leader Senator Chuck Schumer is sponsoring legislation that would make criticism of Zionism count as anti-semitism. This would now make Title VI a very potent weapon for suppressing faculty and student speech critical of Israel. But it won't stop there, since conservative Christians and "patriotic" Americans will no doubt come after faculty speech that creates a hostile environment for them on campus. No more "Texas Taliban" alerts!
Beyond Title VI, which the Justice Department itself can also enforce, Title VII prohibits employment discrimination, which means the still widespread sotto voce discrimination in favor of under-represented minorities will become a target of both private legal actions, but also EEOC "cease and desist" orders and, in the case of public universities, lawsuits by the Justice Department.
Accreditation
Institutions must be "accredited" for their students to be eligible for federal student aid, indeed, for the institution to exist as an educational institution. Existing accreditation requirements are cumbersome but non-ideological. In his first term, Trump allowed colleges to be accredited by accreditation agencies outside their region. Authorizing new accreditors will, no doubt, make it easier for "non-traditional" schools (e.g., scams like Trump University) to be accredited. But the real danger will be if the existing accreditors are de-accredited, as it were, i.e., if they no longer have the power to accredit colleges and universities, and new accreditaion requirements are introduced that, e.g., forbid the teaching of the "Critical Race Theory" bogeyman, or Marxism, or require all students take courses about American greatness and the greatness of capitalism. Such accreditation standards would meet First Amendment challenges, and at least outside the loony 5th Circuit, I would expect them to be struck down as unconstitutional. Other standards--like requiring entrance and exit exams to show what students learned--will create headaches for both schools and students, but those would probably survive legal challenge. They will, however, increase costs, but might be offset by any new accreditation standards that require reductions in administrative costs, which Trump has also been making noises about.
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