Rep. David Joyce says his bill aims to incentivize universities to spend their endowments on cutting costs for students. He says they're taking advantage of federal loan programs.
FIRST ON FOX – As the school year approaches, and education costs figure to be a major issue in the presidential election, Rep. David Joyce, R-Ohio, is pushing a bill with an alternative approach to cutting education costs – targeting bloated university endowments.
Joyce's bill, which he is introducing this week with Rep. Nicole Malliotakis, R-N.Y., would more than quintuple the tax on private universities' endowment profits, from 1.4% to 10%, and it would lower the threshold for the tax from endowments with $500,000 per student to $250,000 per student. Joyce says that schools are taking advantage of federal loan guarantees as they keep increasing the cost of education.
"I think the universities have benefited the most from our student loan program, and they've raised tuition at a multiple that exceeds inflation in many cases. And so they had the most to gain for it," Joyce told Fox News in an interview. "I think you've got to get universities to have more skin in the game."
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Schools that raise tuition above the rate inflation would be hit even harder. If a private university increases net tuition more rapidly than the rate inflation over a three-year time period, the next year it would be forced to pay a tax of 20% on its endowment profits.
"Our legislation will finally hold universities accountable for their role in fueling the student debt crisis and encourage them to limit rapid tuition increases," Malliotakis said in a statement.
According to the Department of Education, the average cost of tuition, fees, room and board in 2022-23 was $30,884 per year, compared to $12,992 in 2000-01.
The legislation comes as the Biden administration, Vice President Harris and her allies are leaning into their push for student loan forgiveness.
"We see a future ... where no teacher has to struggle with the burden of student loan debt," Harris said at an American Federation of Teachers (AFT) event.
"A future of opportunity, a future where kids do not have student debt, a future where we can have a thriving middle class. That's what Kamala Harris means," AFT President Randi Weingarten said Monday on a Progressives for Harris Zoom call.
The Department of Education announced last week it aims to give debt relief "to tens of millions of borrowers this Fall."
"Today, the Biden-Harris administration takes another step forward in our drive to deliver student debt relief to borrowers who've been failed by a broken system," Education Secretary Miguel Cardona said.
Joyce dismissed the move as political in an interview with Fox News.
"Let's face it, it comes out in an election year.... The Supreme Court have already said what this administration has done to date is not legal. And so therefore, they're doubling down on it in the year of the election. It sounds to me like they're pandering to votes versus trying to find the real root cause," he said.
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The solution, Joyce said, is to shift universities' priorities to emphasize providing better value for students.
"There's a lot of great people out there who work very hard, who could use those scholarships that they could be funding with their endowment fund versus taking the money from a student loan that's been backed by the federal government," Joyce said.
