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Wednesday, April 24, 2024

Duke University says federal bill would hurt 3,400 needy students

Duke University officials are sounding the alarm about a provision in a piece of bipartisan federal legislation they say would cost about 3,400 of their students access to federally backed loans.

The provision is in Section 7 of H.R. 6585, also known as the Bipartisan Workforce Pell Act, which has been endorsed by a U.S. House committee chaired by North Carolina U.S. Rep. Virginia Foxx, R-5th.

It explicitly disqualifies private universities that are subject to a 1.4% tax on endowment income from participating in three key types of federal student-loan programs.

The bill’s larger purpose is to broaden eligibility for Pell Grants, making them available for short-term degree and certification programs that meet the needs of “in-demand industry sectors or occupations.”

Because the bill would authorize $160 million in new spending over the next five federal fiscal years, sponsors need a budget offset. Their answer is the loan disqualification.

The endowment tax applies whenever a private university enrolls more than 500 tuition-paying students, with 50% or more of them in the U.S., and has $500,000 or more per student in endowment holdings.

The IRS has said that as of calendar 2021, 33 universities in the U.S. were subject to the tax, which became law in late 2017 as part of the Trump administration’s Tax Cuts and Jobs Act.

The group includes some “large research institutions, some small colleges, and some institutions with medical schools and teaching hospitals,” the National Association of College and University Business Officers says in a Dec. 18 briefing paper.

With its $11.6 billion endowment, Duke rather easily hurdles the holdings-level threshold for the tax.

Wake Forest — which is in Foxx’s district — reported having about $817 million in total endowment net assets as of fiscal 2022-23, below the $500,000 per student threshold.

Davidson College reported $1.3 billion in endowment assets and in its FY23 financials said it was subject to the levy.

Duke Vice President for Government Relations Chris Simmons criticized the provision in an interview with the Duke Chronicle earlier this month. The paper reported he told them the 3,400 students potentially affected at the university include more than 700 in Duke’s School of Nursing.

Duke Nursing’s interim dean, Michael Relf, joined School of Medicine dean Mary Klotman in signing a letter published by WRAL that said the bill would take funding from “nearly 1,400 students in our health care programs,” along with 2,000 students in other programs at the university.

Duke isn’t the top training ground for North Carolina-resident physicians, but many of its students stay in the state. The university is trying harder these days to recruit from North Carolina.

Klotman and Relf said the rescission of the federal-loan would make it that much harder to deal with current and future shortages of health care workers.

“At a time when we need to attract people from a wide range of socio-economic backgrounds and experiences to health care, fewer students would be able to pursue these programs,” certainly “not in the numbers we need to address the state’s dire health care needs,” they said.

Insider Higher Education reports that a potential competing draft of the Pell Grant bill in the U.S. Senate doesn’t include a student-loan disqualification.

Foxx is the only North Carolina sponsor of the bill. New York U.S. Rep. Elise Stefanik, R-21st, is the lead sponsor.

 

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