To our alumni, advisors and supporters:
In President DesRoches’ end-of-semester message, he reflected on Rice’s achievements and progress over the past year and our strides to become a more inclusive, dynamic and impactful university.
Acknowledging the challenges we face during a period of uncertainty for higher education — especially considering federal and congressional developments — he stressed optimism due to Rice’s agility and financial strength.
But the core of that strength, our endowment, faces a new threat.
Endowment tax threatens financial aid, research
For years, the Rice endowment has been subject to a 1.4% excise tax, totaling millions per year. Now, there’s a new proposal to significantly raise our tax burden.
The House of Representatives narrowly passed budget reconciliation legislation with a proposal to increase Rice’s endowment tax by either five or ten times the current rate (7 - 14%). If the Senate agrees, this would deal a blow to Rice’s core teaching and research missions for years to come.
Roughly, a 7% tax would cost Rice tens of millions of dollars annually, while a 14% tax would cost several tens of millions. The timing could hardly be worse as Rice grows, strives to advance access and affordability and conduct research critical to our communities and nation.
Rice recently announced plans for historic enrollment growth, expanded access and free tuition. We also unveiled the university's strategic vision to solidify and grow our position as a global leader in both teaching and research. New taxes would undermine these investments.
They would also hurt efforts to grow our graduate student population, reducing the future highly trained workforce America needs to remain the world’s leader in health care, technology, security and scientific discovery.
On top of ongoing and proposed federal research funding cuts, higher taxes would reduce our ability to explore and solve some of humanity’s most pressing challenges.
Rice advocacy
Increasingly, President DesRoches has been in Washington, joining efforts to emphasize Rice’s role in addressing access, affordability and student debt while leading research and innovation. Alongside our peers and associations, we advocate against these tax increases and research funding cuts, underscoring the value of Rice, higher education and university research in general.
But those efforts only go so far. We must extend these conversations, which are critical to policy makers understanding the importance of Rice’s endowment to our success.
Raising your voice
Rice needs your help. The voices of our alumni, supporters and advisors are vital.
Consider calling or writing to your United States senators. Ask them to oppose raising the private university endowment tax, which would hurt Rice, its students and researchers, and America’s future. There are alternatives.
Calling is usually most effective, and the next two weeks will be the best time as the Senate formulates changes to the House proposal.
Please consider doing two things:
- In the next two weeks, please call your senators or write them, urging them to oppose increasing endowment taxes and support a tax code incentivizing responsible endowment behavior.
- Spread the word to your network, encouraging fellow Owls and supporters to do the same.
To help you, here are a few talking points:
- Rice responsibly manages its endowment, spending aggressively to increase student access and affordability while lowering student debt.
- Over the last 20 years, Rice’s endowment growth remained proportional to the institution's growth.
- The current endowment tax proposal makes education less affordable. It increases costs and reduces support for middle- and low-income families.
- And the tax proposal risks America’s global science and innovation leadership.
- Endowments support the research and innovation behind the technologies on which our quality of life, economic and national security depend.
- If the House version is enacted, Rice will have less impact, students will have fewer options at higher costs, and America will fall behind.
- Instead, support a tax policy aligned with the investments Congress wants to see, especially on access, affordability, student debt and research.
With your support and your voice, this bill can be fixed, helping Rice remain at the forefront of access and affordability, research and scholarship, and the investment benefiting Texas, the nation and the world.
Sincerely,
Nathan Cook
Senior Director of Government Relations
Rice University