Legislation sponsored on Aug. 9 by U.S. Rep. Dave Joyce (R-OH) would hold private colleges and universities accountable for their role in the nation’s student debt crisis and encourage them to limit rapid tuition increases.
The Higher Education Accountability Tax (HEAT) Act, H.R. 9331, which is cosponsored by U.S. Rep. Nicole Malliotakis (R-NY), would amend the Internal Revenue Code of 1986 to modify the excise tax on investment income of private colleges and universities, according to the bill’s text.
“President Biden’s student debt bailout is designed to benefit America’s wealthiest elite universities,” Rep. Joyce said on Tuesday. “Instead of rewarding institutions for forcing increasing debt on students, we must address the root issue. The HEAT Act does just that by holding these universities accountable for the national student debt crisis.”
H.R. 9331 would increase the tax levied on annual private university endowment profits from the current rate of 1.4 percent to 10 percent, and increase the number of universities that must pay the tax, expanding the threshold to all private colleges and universities with an endowment valued at $250,000 per student (currently $500,000).
Additionally, H.R. 9331 would further increase annual tax on endowments to 20 percent for universities and colleges that raise the net price of attendance above the rate of inflation over the preceding three years, according to a bill summary provided by Rep. Joyce’s staff.
The congressman cited data from the National Bureau of Economic Research that shows colleges and universities with larger endowments are not more likely to reduce the list price of tuition, nor do they increase the fraction of students receiving institutional aid.
This results in higher institutional rankings while the size and diversity of their student bodies remains unchanged, meaning underserved populations have limited access to elite postsecondary education, the summary says.
“I am proud to advocate for American taxpayers who are left footing President Biden’s bill for unpaid student loans,” said Rep. Joyce.
H.R. 9331 has been referred for consideration to the U.S. House Ways and Means Committee.