Members of the House of Representatives introduced a bipartisan bill Thursday to eliminate the new excise tax on university endowments.
The bill, sponsored by Reps. John Delaney (D-Md.) and Bradley Byrne (R-Al.), would repeal the 1.4 percent excise tax under the Tax Cuts and Jobs Act signed by President Donald Trump in December. The proposed legislation follows a letter that 49 college presidents sent yesterday to Congress, urging lawmakers to do away with the tax in order to preserve their resources.
The Delaney-Byrne Don't Tax Higher Education Act would restore university endowments' tax-exempt status to help ensure schools have the funding they need for scholarships, research and other student services.
"Colleges and universities rely on their endowments to provide essential funding for financial aid, support difference-making research and teaching and effectively manage complex long and short term costs," Delaney said in a statement Thursday.
Endowments provide almost half of annual revenues at many schools, according to the letter sent by the universities to Congress. The letter was signed by presidents from Ivy League schools including Harvard University, Dartmouth College and Yale University, as well as colleges such as University of Notre Dame, the University of Chicago and Johns Hopkins University.
The new tax will result in unprecedented damage to charitable resources, the presidents said.
"Endowments are not kept in reserve to be drawn on only occasionally or on a rainy day," they wrote in the letter. "In fact, across our institutions, endowments support a significant and growing portion of our operations."
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The excise tax will apply to private schools with more than 500 students and investments of $500,000 per student, according to the Tax Cuts and Jobs Act.
The National Association of College and University Business Officers, or NACUBO, voiced concerns over the new tax law in the announcement of the bipartisan bill to repeal it.
"The new excise tax on endowments at private colleges and universities will simply result in fewer dollars available for scholarships, student services, research, and college and university operating expenses," said John Walda, president of NACUBO, in the statement.
Harvard's endowment is the largest in the U.S.
The school's fund is over $37 billion, or "more than seven times as large as the university's operating budget, and more than half the total spending each year by America's 1,462 community colleges," according to analysis published by Brookings senior fellow Richard Reeves on February 22.