It appears Northwestern University may have to pay a new federal tax on college endowments, while the levy is expected to hit the University of Chicago.
As part of the tax bill approved by Congress this week, the investment income from private college endowments will be subject to a 1.4 percent tax, if the endowment adds up to more than $500,000 per full-time student.
Northwestern, with 17,385 full-time students last year and an endowment valued at just under $10.5 billion as of midyear appears likely to be hit by the tax. It's endowment per full time student is roughly $604,000.
The most reports have assumed that count of students used for the tax law will be based on full-time students. If instead it's based on full-time equivalent students -- giving partical counts to part-timers -- Northwestern and U of C would be closer to escaping the tax.
And, of course, if stock market returns falter and endowment values decline, they could also escape the tax.
Both schools definitely would have been hit if the $250,000 per student limit proposed in an earlier version of the bill had been adopted.
Other tax bill provisions that colleges feared -- including taxation of graduate student tuition waivers, employer reimbursement for tuition and tuition benefits for faculty and staff -- were all cut from the final version of the bill, which President Trump is expected to sign by early next month.