Lehigh Valley

Colleges could take a hit as a result of GOP tax plan

LEHIGH VALLEY, Pa. - Tax cuts are the focus in Washington right now, but for some, a tax hike could be coming. 

Depending on what emerges, if anything, from negotiations between the House and Senate, certain local universities could definitely take a big hit. 

"It's certainly not a tax cut for colleges and universities," said Alison Byerly, President of Lafayette College in Easton.

She's concerned about potential taxes on college endowments.

"We have an endowment that is the result of generosity of past donors and supporters of the college," she told WFMZ. 

Under the House bill, colleges with endowments worth more than $250,000 per student would pay a 1.4 percent tax on endowment earnings. 

Under the Senate bill, endowments worth more than $500,000 per student would get the tax.

Only the House version would affect Lafayette. 

"The endowments that support colleges and universities support critical operations. And particularly they support financial aid and allow us to give scholarships to students," said Byerly. "I think it's very likely that any college whose endowment is taxed is going to have to raise tuition."

Lehigh University may or may not be taxed, said Director of Media Relations Lori Friedman.

But that doesn't put her mind at ease.

"I think we've very concerned," she told WFMZ. "The threshold could be raised at some future point." 

Donors, she said, expect the money they give to go toward things like financial aid.

"If it's being taxed by the government, it no longer is fully going toward that function," she said. 

Lehigh's endowment is worth north of $1 billion, and for other colleges it's much more. 

But, according to Friedman, any tax hurts the wrong people. 

"It's really taking away that money from families and students who are pursuing their education," she said. 

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