Every so often, I'll stop Carleton College students in the campus center or library and ask them why they chose to attend college here. Among the most common answers: I visited campus as a high school student, attended a class and immediately felt at home.
A sample Carleton classroom might find 15 or so students gathered around a small table engaging with a professor. It's a dynamic yet intensely personalized learning environment that prepares our students for great careers and thoughtful engagement in the postcollege world ahead.
Because of our commitment to inclusivity and access for everyone, all races, genders and socioeconomic backgrounds are represented in these classrooms — not only those who can easily afford a four-year college degree. Keeping a Carleton education affordable to these low- and middle-income students and their families is an urgent priority for us; this year we'll award more than $47 million in scholarships, grants and loans. We do this because, over the last 150 years, generations of alumni and friends have helped us build an endowment that funds such scholarship awards.
The recently proposed tax bill introduced in the U.S. House threatens these core guiding principles of higher education by levying a 1.4 percent tax on the investment income of private, nonprofit colleges with endowments greater than $100,000 per full-time student. It also eliminates the student loan interest rate deduction, which is incredibly important to our graduates as they are starting their careers and loan payments. These misguided penalties directly target a specific sector of higher education that cares deeply about maintaining the highest quality of learning for all students.
This is an especially misguided proposal because it diverts resources from the very set of individuals our federal government should be investing in most — young people who deserve a college education.
Small colleges like Carleton already effectively manage costs amid increased regulation and outside pressure. We meet the full financial need of all admitted students; more than 50 percent of our graduates receive some type of need-based financial aid. Our most recent arrivals, the Class of 2021, received more than $10.6 million in need-based Carleton grants, an average of $48,099.
Carleton is particularly invested in increasing its capacity to serve low-income, first-generation students who would otherwise have the choice of where to go to college stripped from them because of socioeconomic status. We're also committed to offering generous need-based scholarships to middle-income kids, who have always been a large chunk of our student body. Those strides would be impossible without offering significant financial aid through our endowment.
Lawmakers in favor of the proposal will argue that taxing endowments ensures accountability from nonprofit, tax-exempt organizations. This is a canard. Taking scholarship dollars away from students with financial need and from general services by leveling an excise tax on endowments — and sending that money to Washington, where it will be used to fill a congressionally created budget hole — breaks faith with donors and hurts the very students Congress says it hopes to support. Students are the reason we exist. If Carleton isn't living up to the ambitious standards we promised on acceptance day, our students let us know through the engagement and accountability principles we're entrusted to teach.
Lastly, this tax penalty will put affected private colleges at a competitive disadvantage. Private college endowments serve the same function for our institutions as the full faith and credit of the states that sustain public colleges — namely, to remain stable during challenging times and to ensure that we can fulfill our educational mission.
For sure, schools like Carleton have a duty to keep college accessible and affordable while holding down costs. It's a challenge that all colleges and universities work on daily and with some very real success. However, taking money from students who rely on financial aid to attend great private colleges isn't part of the solution.
The education Carleton delivers — and is expected to deliver from its high-achieving students — shouldn't be compromised by a shortsighted tax proposal that jeopardizes, and specifically undermines, a private college's ability to offer more personalized instruction.
Taxing endowments would have a profound effect on Carleton's ability to offer students the much-needed educational home they deserve. It's simply a bad and punitive idea.
Steven Poskanzer is president of Carleton College.