From the Daily Princetonian: Princeton will not have to pay any net investment income tax on returns from its $36.4 billion endowment, a University investment official said at a private event in January, after a recent expansion of its undergraduate financial aid program left the University below a 3,000 tuition-paying student threshold to qualify for taxation. Experts had projected that the new tax on wealthy university endowments — enacted under H.R. 1, the omnibus tax and spending bill passed by congressional Republicans in July 2025 — would have cost Princeton roughly $180 million annually. The 8 percent endowment tax was predicted to impose one of the country’s highest university tax burdens on Princeton, which currently enrolls 9,100 undergraduate and graduate students. According to University President Christopher Eisgruber ’83, recent widespread budget cuts have been driven by decreased long-term endowment projections — growth estimates that likely would have been further eroded if the University were required to pay the tax.
...In July, amid several Trump administration attacks on higher education, Congress set the 8 percent tax rate for universities with over $2 million in endowment funds per student and over 3,000 tuition-paying students. At around $3.9 million in endowment funds per student, Princeton was expected to be subject to the tax, and many of its peer institutions are still likely to pay hundreds of millions annually.
...Emeritus Professor of Economics Burton Malkiel GS ’64, who has publicly written about how universities benefit from the illiquid assets of endowments, called the University’s endowment tax strategy a “brilliant response to a punitive and discriminatory tax.” The expansion of financial aid “increases our income and produces much-needed student support,” he wrote to the ‘Prince.’ ...
Full story at https://www.dailyprincetonian.com/article/2026/05/princeton-news-adpol-university-spared-endowment-tax-financial-aid-millions-princo.
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