Letters: Federal tax bill threatens small private colleges

As Congress moves forward with its comprehensive budget and tax bill, legislators seem poised to significantly increase taxes on college endowments from the current rate of 1.4% to as much as 21%. This policy threatens a critical driver of economic growth across Indiana’s small communities—one that supports local businesses, workforce development and regional competitiveness.

Small colleges are vital economic engines across the country. In Indiana, they generate $5.5 billion in economic impact annually. Under the House bill, many small colleges could pay a tax rate that is 400% higher than that paid by prominent research institutions. Our income streams are limited since many small colleges focus on teaching rather than research or medical ventures. For Indiana’s business community, this tax translates to reduced campus-community partnerships in workforce development and fewer skilled graduates to hire.

Small, independent colleges directly employ more than 22,400 Hoosiers, with many colleges and universities ranking among the top three employers in their communities. Beyond payrolls, many colleges prioritize contracting with local vendors for construction, IT services and supplies, a practice that would likely decline under financial strain due to taxation. Additionally, strategic partnerships between colleges and small businesses, such as internship pipelines and innovation hubs, are at risk. The proposed tax ignores the unique role of small colleges in fostering economic resilience in our communities.

Small colleges are not just educational institutions; they are economic anchors. Their survival ensures workforce stability, entrepreneurial innovation and long-term growth for Indiana’s economy.

—Lori S. White
DePauw University president

—Paul Sniegowski
Earlham College president