On Feb. 5, U.S. Rep. Dave Joyce (R-OH), in collaboration with Rep. Nicole Malliotakis (R-NY), introduced the Higher Education Accountability Tax (HEAT) Act, H.R. 1006.
By amending the Internal Revenue Code, the bill seeks to hold private colleges and universities accountable for their role in the student debt crisis by increasing taxes on their investment income. It also aims to incentivize these institutions to allocate a larger portion of their endowments toward student aid. Congressman Joyce states, “Institutions are making record profits and exacerbating the student debt crisis with rising tuition costs.”
Even though private universities do not receive federal funding to the extent of public institutions, they still get government money one way or another. Public universities are funded mainly through state government appropriations, which help support their operations and can keep tuition costs lower. In contrast, private colleges do not receive state funding but rely on tuition, endowments, and private donations. However, they still benefit from federal funding indirectly, as federal student aid, such as grants and loans, is directed to private colleges when students pay their tuition and expenses.
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For example, these schools receive federal funds from students who are eligible for the Free Application for Federal Student Aid (FAFSA) or take out federal loans to afford their high tuition prices. Want a sense of the drastic difference in cost? On average, tuition at a public college would only cover 61.4 percent of the tuition at a private college.
It is no secret that the student debt crisis in the U.S. continues to grow year after year. The average American owes $38,375 in federal student loan debt, not including private loan debt, which brings the total average debt per person to $41,520. With inflation and everyday costs outpacing income, punctual repayment is unsustainable for the far majority of borrowers. As a result, debt accrual has become a reality for most, which has only exacerbated the crisis.
Elite colleges funnel tax-exempt endowments into research, programming, and inflated faculty salaries—including DEI administrators—fueling administrative bloat and ideological agendas over academics. As Minding the Campus has documented, DEI not only indoctrinates students but also exploits them financially. While private institutions obscure their budgets, public university data reveals the scale of DEI spending in higher education.
A diversity report by the College Fix found that the University of Michigan spent $30.68 million in 2023-2024 on expanding its DEI program, supporting high salaries and benefits for at least 241 faculty hired to provide DEI services and programming. To put the absurdity into perspective, the College Fix noted that this multi-million dollar budget “would pay in-state tuition and fees ($17,228) for 1,781 undergraduate students.”
If public universities invest millions of dollars into DEI, it is likely that private institutions—many of which have much larger endowments—are doing so at an immense scale, yet without the same level of enforced transparency.
Despite constant tuition hikes, universities funnel millions into DEI programs that stifle free speech, divide students, and distract from education—diverting funds that could strengthen financial aid, campus infrastructure, etc.
[RELATED: Why Not Use Endowments to Lower Tuition Costs?]
The HEAT Act proposes to increase the 1.4 percent tax levied on private university endowment profits—originally established during President Trump’s first term—to 10 percent. It would also expand the tax’s reach to include more private colleges and universities. Currently, only institutions with an endowment of $500,000 per student are subject to the tax; the new legislation would lower the threshold to $250,000 per student. Additionally, universities and colleges that raise the net price of attendance above the inflation rate over the preceding three years would face an additional 10 percent tax.
Even with Trump’s efforts to remove DEI from colleges receiving federal funds, private universities are more protected since the majority of their funds are from private donations and gifts. However, this bill could weaken some of that protection and make private institutions accountable to their students and their tuition dollars, ensuring they spend the money on programs that will educate students, not indoctrinate them.
Private universities continue to charge exorbitant tuition, burdening both students and taxpayers. The HEAT Act would hold institutions accountable by taxing massive endowments that fund ideological programs over student aid—pressuring them to prioritize affordability and education.
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Image: Screenshot of H.R.1006 from Congress.gov and image of Congressman David Joyce from Wikipedia. Combined and edited for illustrative purposes.
This article was originally published at www.mindingthecampus.org
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