Same Law, Five Outcomes: Nine University Endowments Rea...

Exactly one year ago today, on July 4, 2025, the One Big Beautiful Bill Act became law, and buried in it was a rewrite of the tax on university endowments. The old rule was a flat 1.4 percent on investment income. The new rule is tiered by endowment per student, from 1.4 percent up to 8 percent, and it only touches schools with at least 3,000 tuition-paying students and at least $500,000 of endowment for each of them. That single law is a natural experiment, because it lands on nine universities whose tax returns arrived on the same desk this week in five completely different places. Read from their filings, they invest the same way, they are cutting at the same time, and the tax sorts them by exactly one number. Everything below is from the Form 990s, free at ProPublica, and the university financial reports.

One caution first, the same one that governs every endowment story: a university's total assets on its tax return are not its endowment. The 990 covers the whole balance sheet, buildings and hospitals and research contracts, so the endowment is always the smaller, separately reported number. This post keeps the two apart.

The tax, in one table the law wrote

Here is where the endowment tax lands, keyed to endowment per student.

Stanford, with roughly $2.3 million of endowment per student, sits in the top 8 percent bracket and estimates the hit at around $250 million a year, up from about $43 million under the old rate. Rice, at roughly $940,000 per student, lands in the 4 percent bracket at about $10 million a year. The University of Chicago, despite a $10.9 billion endowment, pays the lowest 1.4 percent rate, because its large student body dilutes the per-student figure below the next threshold. The University of Southern California is not taxed at all, because at roughly $190,000 of endowment per student it falls under the $500,000 floor. And Caltech is exempt entirely, because with about 2,430 students it sits below the 3,000-student floor, so the same law that costs Stanford a quarter of a billion dollars actually saves Caltech the few million it used to pay (Faegre Drinker on the OBBBA endowment tax). One law, five outcomes, decided by a ratio.

The richest, and the most strained

Stanford is the giant, and it gets its own post. Its endowment reached $40.8 billion in 2025, its Management Company's merged investment pool returned 14.3 percent, and its payout of roughly $1.95 billion funds about a fifth of the operating budget (Stanford giving; Chief Investment Officer). And in 2025 the richest university in the world cut $140 million from its budget and eliminated 363 staff jobs (Stanford Daily), squeezed between the new 8 percent tax and a proposed federal cap on research reimbursement.

The University of Chicago is the opposite story: elite and strained. Its $10.9 billion endowment sits against roughly $6.4 billion in bonds and notes payable, close to 59 percent of the endowment, and in May 2026 Fitch downgraded the university to AA citing that debt (Higher Ed Dive; Crain's). After more than a decade of operating deficits, it is cutting $100 million in spending, reducing PhD admissions, and pausing admissions in nineteen doctoral programs (Forbes). Its endowment has tilted increasingly into private equity, from about 20 percent of the pool in 2005 to 37 percent in 2025. Chicago is the proof that a giant endowment and financial strain can live in the same institution, because the endowment is largely donor-restricted and the debt is not.

USC is a third variation: a very large university, $8.8 billion endowment, running an operating deficit above $200 million and shedding at least 974 jobs since mid-2025, while a $200 million gift from Mark and Mary Stevens launches an AI initiative (USC finances; Higher Ed Dive). USC escapes the endowment tax entirely on the per-student math, and is cutting anyway, because the pressure is not only the tax; it is the threatened federal research money, which USC put at $300 million or more.

The research-flow schools and the health-system anomaly

Two of these institutions have tax returns dominated not by tuition or endowment but by money flowing through them. Caltech reports $4.17 billion in revenue against a $4.5 billion endowment, because it operates NASA's Jet Propulsion Laboratory and roughly $2.4 billion of federal space money runs across its books; when the Mars Sample Return budget collapsed, JPL cut about 1,000 jobs in 2024 (JPL). And the University of Miami is the strangest of all: it reports $7.04 billion in revenue against a $1.71 billion endowment, because it is really a health system with a university attached. Its UHealth network supplies roughly 63 percent of operating revenue, dwarfing tuition, and it runs the top-ranked Bascom Palmer eye hospital and the region's only NCI-designated cancer center (The Miami Hurricane). Read Miami's filing and you are reading a hospital company that grants degrees, and its leader is paid accordingly: Miami's president, who also heads the health system, earned about $5.9 million, roughly $1.9 million in base salary and $1.7 million in bonus. That is the pattern the Schedule J pages show across the group. Where a president also runs a hospital, the bonus balloons; where a president runs only a university, the pay is mostly salary, Caltech's president at about $1.79 million and Rice's at $1.29 million, both with modest bonuses. And at several schools the highest-paid person on the return is not the president at all but a medical executive or, as at HHMI, the person who runs the money.

The Texas privates and the Catholic contrast

Rice, in Houston, holds an $8.5 billion endowment against fewer than 9,000 students, one of the highest ratios in the country, which is why the 4 percent tax bracket costs it a real $10 million a year; it is nonetheless expanding enrollment and offering free tuition below $200,000 of family income, backed by a $100 million Moody Foundation gift (Rice). Baylor, the world's largest Baptist university, is the ascending story: it reached top-tier R1 research status in 2021, three years ahead of its own plan, closed a $1.5 billion fundraising campaign, and watched its endowment climb toward $2.5 billion while its tuition dependence actually fell to about 60 percent of revenue (Baylor). Texas Christian University, at a roughly $2.68 billion endowment, is quietly growing, with record enrollment and a new medical school.

And DePaul is the contraction that pairs with Catholic University from the earlier post. The largest Catholic university in the country by enrollment, with a roughly $1 billion endowment and about 86 percent of its revenue coming from tuition, it laid off 114 staff in December 2025 against a $12.6 million shortfall and a $27.4 million cut target, after new international graduate enrollment collapsed 62 percent under visa policy (WBEZ; Higher Ed Dive). A tuition-dependent university with a small endowment cannot invest its way out of an enrollment shock, which is the same lesson Catholic University is teaching a few hundred miles east.

The one thing all nine share

Whatever bracket the tax puts them in, every one of these nine universities invests its endowment in the same public and private markets a pension fund and a retiree use, tilted increasingly toward private equity, which is why Chicago's private-markets share nearly doubled in twenty years and why Stanford pays for a Management Company to run the money. That is the same well again. And in 2025 and 2026 they are all doing the same thing at once, cutting budgets and jobs, because two pressures arrived together: the new tax on their investment income, and the threatened cut to the federal research money that flows across their books. The endowment is supposed to be the thing that makes a university permanent and independent. This year it is also the thing the government decided to tax, and the filings show nine institutions responding to that in five different amounts but one direction.

Fact-check notes and sources

All revenue, asset, and net-asset figures are from each university's most recent IRS Form 990 via ProPublica's Nonprofit Explorer: Stanford (EIN 94-1156365, revenue $9.54B, assets $63.33B, net assets $52.47B), University of Chicago (EIN 36-2177139), USC (EIN 95-1642394), Caltech (EIN 95-1643307, revenue $4.17B), Rice (EIN 74-1109620), Baylor (EIN 74-1159753), TCU (EIN 75-0827465), DePaul (EIN 36-2167048), and University of Miami (EIN 59-0624458, revenue $7.04B). Endowment figures are from each university's own reporting and are distinct from the 990 total-assets line.
The OBBBA endowment-tax structure (tiers of 1.4, 4, and 8 percent by endowment per student, the 3,000-student and $500,000-per-student floors, effective for tax years beginning after December 31, 2025): Faegre Drinker; the bracket outcomes for each school follow from applying it to their endowment-per-student figures.
Stanford's $40.8 billion endowment, 14.3 percent return, roughly $250 million estimated tax, and the $140 million budget cut with 363 layoffs: Stanford giving, Chief Investment Officer, and Stanford Daily.
Chicago's roughly $6.4 billion debt, the May 2026 Fitch downgrade to AA, the deficits, and the private-equity tilt from 20 to 37 percent: Higher Ed Dive, Crain's, and Forbes.
USC's deficit above $200 million and at least 974 layoffs: USC and Higher Ed Dive. Caltech operating JPL and the roughly 1,000 JPL job cuts in 2024: JPL. Miami's UHealth supplying about 63 percent of operating revenue: The Miami Hurricane.
Rice's enrollment expansion and free tuition below $200,000, with the $100 million Moody gift: Rice. Baylor's 2021 R1 status and $1.5 billion campaign: Baylor. DePaul's December 2025 layoffs, shortfall, and 62 percent international-enrollment drop: WBEZ and Higher Ed Dive.
The presidential compensation splits (Miami's leader about $1.9 million base and $1.7 million bonus; Caltech's president about $1.79 million and Rice's about $1.29 million, both mostly base salary): from each university's Form 990 Schedule J and Part VII, via the ProPublica links above.

This post is informational and historical, not financial, tax, or investment advice. All figures are reproduced from public filings and the institutions' own reporting. Organizations and individuals are discussed from the public record as nominative fair use, with no affiliation implied and nothing endorsed by any of them.

Same Law, Five Outcomes: Nine University Endowments Read From Their Filings