Private college endowments face higher tax to fund vocational training
S. 4907 — TRADES Act · Filed by Ashley Moody (R-FL) · Introduced Jun 24, 2026 · Referred to committee
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What it does
This bill raises the federal excise tax on investment income earned by private colleges and universities from 8% to 15%, and directs the Treasury to transfer all revenue gained from this tax increase to fund career and technical education programs under the Carl D. Perkins Act. The higher tax on endowment earnings at wealthy private institutions is meant to redirect money toward vocational training and apprenticeships for working Americans.
Why we flagged it
The bill's operative mechanism is a straightforward tax increase on a specific asset class (private college endowment investment income) with a dedicated revenue stream to a named public program. It is a transparent policy choice, not a hidden rider or carve-out.
What the text implies
- The tax increase applies only to private colleges, not public universities or other tax-exempt entities with endowments (hospitals, foundations, think tanks), creating a sector-specific burden that may incentivize private colleges to restructure endowment management or reduce endowment-funded scholarships.
- The bill ties CTE funding to a variable revenue stream (the tax increase) rather than a fixed appropriation, meaning CTE programs face budget volatility if private college endowment investment returns fluctuate.
The full analysis lists 3 implications of this text.
Who stands to gain
Career and technical education programs (public); Community colleges and vocational schools receiving CTE funding