Dear Members of the Brown Community,

Earlier this month, I shared details on Brown’s work to understand and address concerns about the tax reform legislation being considered by Congress, and particularly a number of alarming provisions related to higher education. Today, I am writing with an update on the status of the bill, its potential financial implications for members of our community and how we continue to make our voices heard on this critical issue.

On Nov. 16, the U.S. House of Representatives passed H.R. 1, “The Tax Cuts and Jobs Act.” A number of provisions in the bill would adversely affect efforts to make higher education affordable and accessible. They also would reduce Brown’s ability to support the groundbreaking research that plays a key role in addressing many of our nation’s most complex and daunting challenges.

This week, the U.S. Senate will likely consider the bill. Fortunately, some of the most troubling provisions of the House bill are omitted from the Senate version — a testament to the advocacy of thousands of students, faculty, staff members and alumni who have made their voices heard on the negative effect on higher education.

Even so, other harmful provisions remain, including a proposed 1.4 percent excise tax on the net income of private university endowments. As you know, these endowments provide critical support for undergraduate financial aid, graduate student fellowships, summer internships and UTRAs, faculty research and more. And while the Senate version preserves the tax exemption for tuition waivers and stipends for graduate students, as well as the deduction for student loan interest, there is no assurance that these provisions will be omitted from the final version of H.R. 1.

Financial Implications and Continuing Advocacy

At Brown, we continue to assess the financial consequences of the provisions being considered. Provost Richard Locke is meeting weekly with the University Resources Committee, as it prepares recommendations for the FY19 budget, to inform members of the potential costs to the University and members of the Brown community.

We estimate that the new 1.4 percent excise tax on endowments would cost Brown between $3.3 million and $6.6 million each year, and would set an alarming precedent for the tax treatment of nonprofit colleges and universities. An elimination of the tax exemption for graduate students would increase their tax obligations by a total of $27 million annually. And, if the tax exemption for educational assistance provided to employees and their dependents were eliminated — as passed in the House bill, but not currently included in the Senate version — new taxes of millions of dollars would be imposed on our employees who receive these benefits.  

If any or all of these provisions become law, we will work together as a community to minimize the damage to our students and employees, consistent with our strong commitment to education and research. However, there is still an opportunity to change the direction of the legislation.

This coming week, when the Senate is expected to begin debate on the bill, will be critical. Guided by our Government Relations Working Group, we have been working diligently with colleagues at other universities and our associations to advocate for the removal of the many harmful provisions of the tax legislation. I have communicated our concerns directly to members of our Congressional delegation in Rhode Island. I am heartened by the efforts of our Corporation members, alumni and friends who have expressed their concerns to Congress as well.

If you want to make your voice heard on these issues, please consider contacting members of your Congressional delegation before Nov. 29. You can find the best contact information here:

As Congress continues to consider this legislation, Brown’s senior leaders will provide updates on developments that would have a negative impact on students, faculty and staff or impede our ability to fulfill our mission.



Christina Paxson


Christina H. Paxson


Professor of Economics and Public Policy

Brown University