President Donald Trump’s tax and spending legislative package, the “Big, Beautiful Bill,” is expected to have sweeping impacts on higher education. But even before its Thursday afternoon passage, it was creating concerns for universities — including Duke.
The bill, which will provide substantial tax cuts and slash several social safety net programs, was passed by the House of Representatives July 3 in a 218-214 vote ahead of Trump’s desired July 4 deadline. Democrats, along with two Republicans, unanimously opposed the bill. On Tuesday, it passed the Senate 51-50, when three Republicans — including Sen. Thom Tillis, R-N.C. — and all Democrats voted against it.
Proponents of the bill argued that it will provide tax relief, encourage economic growth and reduce waste in federal programs. However, many representatives of higher education, including Duke’s, have expressed concerns about the bill’s attacks on what some Congressmembers have dubbed “woke, elite universities.”
Duke has three major concerns with the bill, according to Chris Simmons, Duke’s vice president for government relations.
Endowment tax
The bill would levy a tiered tax on university endowments — most of which have been historically tax-free — in an effort to prevent universities from “[abusing] generous benefits provided through the tax code.”
Many universities have pushed back against the tax, which could impose a rate ranging from 1.4% to 8% on the wealthiest colleges.
Funds from endowments are often used to support essential university operations, including support for low-income students. Duke University’s endowment, which was valued at $11.9 billion at the end of fiscal year 2023-24, has been used to fund financial aid, research, professorships and instruction.
In a July 3 email to The Chronicle, Simmons wrote that Duke will likely end up on the “lowest tier” of the endowment tax structure, which is based on the size of the endowment per enrolled student. However, a degree of uncertainty remains — the tier is dependent on the proportion of international students, whom the bill excludes from enrollment totals.
“The exact financial implication is hard to say, but the result would be [that] there would be less resources to invest in student aid programs, research programs, things that we want to do … just because we would be sending more money to the federal government,” Simmons said in a May 28 interview with The Chronicle. At that time, the bill called for a higher tax than it enacted in its final version Thursday. Still, Simmons noted that investing in student aid will remain a priority for the University, even amid continued attacks from the federal government.
He added that Duke believes universities can use their resources more effectively by investing directly in students, rather than diverting those funds to the federal government.
Read The Chronicle’s previous coverage on the endowment tax, here.
Loan restrictions
The bill also seeks to eliminate and restrict several loan programs, which are designed to provide affordable funding mechanisms and paths to loan forgiveness for students.
The legislation eliminates the Graduate PLUS loan program and places limits on Direct Graduate Loans, restricting graduate and professional students to a lifetime total of $100,000 and $200,000, respectively. Currently, Grad PLUS loans are capped at the total cost of attendance, which can often exceed the lifetime caps imposed by the new legislation. At Duke, the estimated cost of attendance per term at The Graduate School is between $48,603 and $50,626, meaning that a $100,000 loan would only fund one year of study.
Additionally, the bill restricts Parent PLUS loans by imposing a lifetime cap of $65,000. These loans, which are designed to help families pay for college, currently have a cap at the total cost of attendance minus any additional financial aid.
Furthermore, most current repayment plans will be phased out, forcing borrowers to enroll in the income-based repayment or the nascent Repayment Assistance Plan. In many cases, this could result in higher monthly costs or longer payment periods. The Public Service Loan Forgiveness program was unaffected by the bill, though the Trump administration is working to limit eligibility for the program through the Department of Education.
Simmons described the new regulations as “a big issue.”
“The Congress continues to pick away at graduate and professional student aid and decrease the federal investment in our graduate and professional students,” he wrote. “Moving forward, these students will have fewer, and less affordable options to fund their education.”
Medicaid cuts
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The bill proposes restrictions to Medicaid and its expansion under the Affordable Care Act, which will impact both the Duke Health System and health care across North Carolina.
Duke’s health system, which was ranked first overall in North Carolina, is the largest employer in Durham County and supported almost 67,000 inpatient and over 5 million outpatient admissions in fiscal year 2023. Simmons noted that the bill would have “a very negative impact” on health systems across the state, especially in rural communities, by eliminating funding that reimburses hospitals for Medicaid patients.
The bill restricts critical financing tools for hospital and health care providers, including cutting State Directed Payments (SDPs), which allow the state to supplement Medicaid reimbursements and help keep providers financially stable, and capping taxes on medical providers, which can be used to funnel federal Medicaid money into state budgets. These two changes would most impact Medicaid expansion.
Several Republicans — including North Carolina senator Thom Tillis — opposed these policies, arguing that many states, especially those with a high percentage of rural hospitals, rely on such methods to fund Medicaid. In response, the Senate included a $50 billion fund for rural hospitals and agreed to delay the cuts by a year.
But concern remains. In a July 2 letter to North Carolina’s Representatives in the House, Governor Josh Stein warned that the proposed cap and restrictions on SDPs would leave the state without enough funding to meet rising costs and comply with new federal Medicaid requirements. Under current state law, Medicaid expansion must end if provider tax revenues fall short — putting expansion at risk. Expanded Medicaid access currently covers more than 670,000 North Carolinians.
Although proponents argue that the restrictions eliminate waste and contribute to the long-term health of the program, federal contributions to Medicaid will remain the same, meaning that any savings will likely stem from program drop-outs. According to two separate estimates, between 12 million and 20 million people could lose Medicaid coverage under the bill.
Moving forward
This is not the first time Duke has faced a challenge from the federal government, with the 2017 Tax Cut and Jobs Act initiating the first version of the endowment tax. However, Simmons said that today’s political climate presents unique challenges, including the federal government’s “scrutiny of higher education” and “extreme disinvestment in research from across the board.”
Before the bill was passed by Congress, Duke was “working closely” with North Carolina senators, coalitions like the American Council on Education, the DLA Piper Law Firm in Washington, D.C. and individual universities to confront the threats of the bill.
“For months, the University has planned for legislation [like this] that impacts the University and Health System,” he wrote. “We’ll continue to plan and adapt as necessary.”
Zoe Kolenovsky contributed reporting.
| Features Editor
Kate Haver is a Trinity junior and features editor of The Chronicle’s 121st volume.
