It looked like the University of Notre Dame would be safe from a Republican proposal to raise taxes on college endowments.
But a loophole for religious schools was removed from the final tax bill, leaving the South Bend, Indiana-based school to pay a higher levy on its $20 billion endowment.
Under the “One Big Beautiful Bill Act” that President Donald Trump signed last week, wealthy private schools with at least 3,000 students will face a higher tax rate on the net investment income from their endowments. Religious colleges had been exempted from the expanded levy in previous proposals.
Notre Dame’s endowment is now set to face a 4% tax on net investment income. A university spokesperson said the school was “deeply disappointed” in the development.
“Any expansion of the endowment tax threatens to undermine the ability of a broad range of faith-based institutions to serve their religious purpose,” the spokesperson said in an emailed statement.
The new legislation builds on the previous Republican push to tax endowments, which colleges say are crucial to providing financial aid. In Trump’s first term, Congress imposed a 1.4% tax on the few dozen schools that had endowments of $500,000 or more per student.
Under the new framework, Harvard, MIT, Yale, Princeton and Stanford — the five institutions with endowments of more than $2 million per student — will face an 8% tax. Schools with $750,000 to $2 million per student, like Notre Dame, will see an increase to 4%. The rate for private schools with $500,000 to $750,000 per student is unchanged at 1.4%.
Analysts at S&P Global Ratings said the higher taxes could put pressure on schools and require management teams to review budget options to offset the cost. But the report published Monday noted that many of the schools are well-positioned to adjust to the increased levy.
“Most of the universities that will face the highest tax bracket still benefit from sound financial positions with robust liquidity and flexibility, as well as management expertise to make budget changes and avoid disruptions,” analysts led by Nora Wittstruck wrote.
