It appears that Emory endowment investment returns will be taxed under the new tax bill.
https://www.cnbc.com/2017/11/30/gop-college-endowment-tax-wont-just-hurt-the-ivy-league.html
Under the Republican Tax plan, schools like Notre Dame and Emory University would have the income on their endowments taxed. Even the endowments of schools like Earlham College in Richmond, Indiana — where nearly one-third of students receive Pell Grants — would be taxed.
That’s unfortunate considering that 18% of Emory’s students receive Pell grants:
http://www.emory.edu/home/admission/financial-aid/index.html
Emory has a very high percentage of Pell grant recipients compared to other national universities:
https://www.usnews.com/best-colleges/rankings/national-universities/economic-diversity-among-top-ranked-schools
@BiffBrown
Yes it is, some have told me that it’s not significant, however 60+ million dollars a year is in my opinion. That is equivalent to 900 full rides for one year at Emory. If Emory is going to cut Financial aid it should do it strategically. starting with Candler school of theology then Oxford college then maybe Emory college. I say this because divisions need to be ranked based on importance. The majority of the grad programs need to be protected as opposed Theology that doesn’t provide much clout for Emory. I can say the same about Oxford or the music department, etc.
@VANDEMORY1342
Your $60 million/year estimate for the amount of the endowment tax is on the high side.
The endowment tax is a 1.4% tax on an endowment’s investment returns, not on the total value of the endowment. The tax applies to any private university with an endowment of $500,000 per student or more.
https://www.politico.com/story/2017/12/22/harvard-tax-college-endowments-252892
Emory’s endowment has averaged a return of around 10% annually in recent years and is valued at around $6.7 billion currently.
http://news.emory.edu/stories/2015/11/upress_endowment_value_update/campus.html
So .014 * 6.7 billion * .1 = $9.38 million in endowment taxes annually
And, Oxford financial aid shouldn’t be high on the list of programs to be cut. Oxford isn’t just a smaller version of Emory but rather a distinctly different educational model that offers a place for students interested in a different look.
@BiffBrown
My hope is that nothing is cut and that Emory becomes truly financially stable. I personally thought it as the whole Endowment and not just investment income. I wonder why people were running scared on campus if that’s the case. They probably thought as I did. 10 million is still significant, I just hope they choose to cut certain aspects strategically (I.E outsiders won’t notice) instead of cutting Econ again like they did in the past.
The $10 million annual tax is significant. Emory could avoid it by increasing enrollment and getting under the $500K value per student. Duke barely escapes this tax while Emory gets hit. Oops, Emory would have to add over 1,000 students to avoid the tax. That’s not happening anytime soon.
@ljberkow @BiffBrown
Thank you, I’ve said this before the schools that are barely over the threshold for both criteria will be affected the most so Emory, ND, and Wash U will take the largest hit, with the largest consequences. I personally think that Emory’s current 18-19% in pell grant students can be reduced to 12-13%, a respectable amount. Theoretically if Emory gives Pell grant students full rides or close to it, they currently spend 70 million a year on this group of students. A 6% reduction would result in around 45 million a year, a savings of 25 million a year.
I think Emory has no option, they have to cut something as most of the endowment if for the medical center, so they couldn’t spend that correct?
@VANDEMORY1342 I wouldn’t be so sure they will cut anything. They may just need to get used to a reduction of income in the enowment fund. Making cuts to services should not be an option.
The latter 2 are my problems, the Pell grant.
@VANDEMORY1342 Uhmm, no. Let us not be silly and @ljberkow I agree and Emory does not need to increase its enrollment anymore. Undergraduate facilities are not growing fast enough (or at all) to even really accommodate the increases it has already experienced over the past decade (between the 4 undergraduate units, there has been an increase of about 1000 which is insane!). Candler’s programs kind of does (Candler is one of the entities and its library that put Emory on the map among elite schools before it became a research university) get attention without being a leech (it has its own endowment and is not overly demanding of the university’s resources such as say….a medical school, or a health care system. Also, they also get the benefit of receiving a majority of the research funding, so allocations and policies should not be altered to match the “attention getters”. They have plenty of money yet still demand just as much resources and attention as they get. The traditional Emory model of “only throw exhorbitant amounts of money at what already does extremely well” seems to leave so many gaps in what is truly excellent and what is not. It has never worked, and even in situations like this, could only hurt. Notice how the strategic planning of the College now wants to turn attention to branches of the social sciences and humanities it hurt severely in 2012 with that very same type of logic).
Also just from a logics point of view, Candler mostly has Masters students so likely does not award financial aid in the same way as an undergraduate entity and raises a solid amount of revenue through the tuition dollars as well as has very loyal alumni (can you say the same about the College. Maybe GBS, but College, nope) pretty much like the other professional schools (it may actually have a much stronger community, so could be better than the allied health schools. Its endowment certainly indicates so). You have to pay for a Masters (through loans usually) and most programs even make students pay tuition (no waiver, not even most STEM programs will not waive for Masters).
Oxford should absolutely NOT be touched as it is gaining ground. To target Oxford or any entity like that would be ridiculous. Using that sort of Emory main campus elitism, I should propose that we extend the logic to how The UCal system should allocate funds or changes policies. It would be like stuck up people at Cal sitting around and saying: “UCLA is now less selective than Oxford (bet you wouldn’t randomly attack UCLA) and certainly less selective than us and San Diego, they should make it tighten its financial aid policies, because that would help them and the system as a whole” (roll my eyes), NOT.
At the very least, Oxford leads some people who feel iffy about applying to Emory (either because of size or chances of admission) to apply to Emory with the addition of the Oxford application. To do anything to its already struggling financial aid (versus packages on main) would to erode its increasingly competitive position as well as main’s. Furthermore it is already need aware. You typically complain about the progress in admissions basically being too slow for you, so let us be pragmatic and imagine the effects of your idea. They wouldn’t be good. If you are going to prestige whore for Emory, do it right and recognize that the prestige of its undergraduate programs in terms of the superficial metrics you value so much do not function in a vacuum. If one of the 4 units is adversely affected, there will be problems in terms of recruiting as well as other issues.
Also, I think the guidelines and criteria for a Pell Grant awardee are more relaxed than people think. I know for a fact many with higher incomes than my family back when I attended Emory (and for a while my family was near the line for the loan replacement program) qualify. Also, other schools with much wealthier student bodies overall and far fewer people at the bottom of the income brackets have a similar amount of Pell Grant awardees. Given that Emory’s financial aid is a bit more conservative than some of the competitor schools (beyond that loan replacement bracket), I have doubt that every Pell Grant awardee is getting a full ride. Many may, but I do believe a bit of them may only fall into the loan capping bracket which means they still must pay a significant amount
@bernie12
I wasn’t saying what they should cut, I was arguing how easily the school can save 10 million. If they save 25 million with a 6% cut in pell grants they can save 10 million with 2-3%. My real concern is the precedent this sets. I disagree with @ljberkow. Emory should not get used to lower returns on investment. The current administration is clearly moving the “Overton window”. 1.4% might seem acceptable today, but it could easily be 5 or even 10% in the future. Emory needs to be proactive in protecting it’s finances. I hope it doesn’t seem like I’m arguing against the disadvantaged students a Emory, however if a Morton’s fork had to be made I would choose a reduction in Pell students over a reduction in research output. Again 10 million per year is a lot of money that’s a loss of a billion a century.Yes, a century is a very long time but, Universities utilize very long term investments.
I agree with you that Emory is large enough, and there’s really not much space to expand.
Feel free to disgagree. Tax reform is going to add more value and income to Emory’s portfolio and there is a good chance that net income, even after tax will go up even more. Reducing the corporate rate from 35% to 21% will drive up the value of the stock Emory owns, including the $1.5 billion in Coke stock.
@VANDEMORY1342 : You said: “If Emory is going to cut Financial aid it should do it strategically. starting with Candler school of theology then Oxford college then maybe Emory college”
You displayed a clear priority of cuts if they were to occur. One doesn’t make sense (Candler) and the other basically happened years ago (when they became need aware) and does not need any more. ECAS is also struggling to be competitive now with its need based aid (no the problem is not really that it admits and enrolls too many low income students. The actual problem is that it was not strategic, and unlike other peer schools, did not develop a significant merit aid endowment so must spend rather “directly” so to speak. There are schools in Emory’s endowment bracket who are much more generous with financial aid or merit aid and do not have median incomes of 200k). None of these entities need to be touched as a result of this policy, at least not financial aid funds.
I am also confused about the research output comment. The two may not interact in the way you think Institutes and entities can still conduct it albeit with potentially less federal funding (consider this, the PI must apply for the funding. You don’t get it. Oops. Emory will not provide the monies. Emory gives the space and the administrative apparatuses to do things, but at no time will funds be redirected to PIs. Most privates spell “must be fully externally funded, get to writing grants”. Now what could happen is that key pieces of equipment that belong to a core could become more costly. Like the CryoEM associated expenses Emory will incur). Whatever they do to undergraduates or other entities will not compensate for any struggle on their parts. In addition, would you argue that stipends for graduate students (largely responsible for research output should decrease)? If so, I would argue that it may actually be more cost effective to bring in undergraduates and heavily push involvement in research (basically providing some free labor to the labs as the students are either part of an unfunded program or funded externally). At 6 billion something dollars in endowment, Emory can find a way without cutting much. People act like these institutions are poor or as if this is equivalent to 2009. It really isn’t. I really wouldn’t throw cuts out there as an option and certainly would not bring a conversation about something like financial aid into it when these elite schools have so many other petty things that could be altered.
@ljberkow I didn’t think of that, a plus I guess.
@bernie12
Well I was giving examples. I don’t know what Emory’s portfolio essentially looks like so what they could or couldn’t cut is private knowledge that I don’t have. However, if they were to make financial changes for the betterment of institutional stability this would be the time to do it.
@VANDEMORY1342 no worries. I am not a big fan of the Republican tax reform, but I am pretty confident that Emory won’t take this out on its students or programs.
It’s incredible that a congressman would specifically criticize Emory’s executive compensation (see below). I doubt Emory’s officers and deans are the most highly paid.
https://finance.yahoo.com/news/colleges-trash-gop-tax-bill-say-itd-hurt-financial-aid-153717310.html
"Of all lawmakers, Rep. Tom Reed (R-NY) has arguably pushed the hardest for the provision, having worked on similar legislation over the years.
Nora Retana, a spokesperson for Reed, said she had heard the punishment argument and rejected it.
“It’s absolutely not a punishment. Reed has made a comprehensive push for college cost reform and that’s ultimately his goal,” said Retana. She admitted that this specific bill didn’t address college cost, but said that it’s more about challenging the tax-exempt label of wealthy colleges that pay millions to executives and outside fund managers. President James Wagner of Emory, for example, makes $3.5 million a year.
“They’re tax-exempt but paying presidents millions,” said Retana, who also noted that the endowment managers take in enormous salaries. “If you want to operate as a business, be a business. This is not not about all endowments, it’s about reining in ones that take advantage of that.”
@BiffBrown
Well… at least Emory is in the news again lol. But why not call out another school, preferably one in NY, whose constituents he represents?
Rep Reed represents a section of New York state that includes Cornell University, which happens to be the largest employer in that congressional district.
https://en.wikipedia.org/wiki/New_York%27s_23rd_congressional_district
Cornell University’s president made about $1.6 million per year in 2015 or 2016, which ranked 10th highest among private universities.
https://www.forbes.com/sites/karstenstrauss/2016/12/05/the-highest-paid-private-college-presidents/#5cc24ed5444e
Emory’s president didn’t make the top 10 that year.
I don’t know where Reed got the figure for Wagner’s salary.
This filing lists Wagner’s salary when he was president of Emory at $1.2 million per year:
http://nonprofitlight.com/ga/atlanta/186301-emory-university
So now we know two things about Rep Reed. He is a hypocritical coward and he defined the cutoff for the endowment tax in such a way that Cornell would fall outside the tax.
http://www.reachhighscholars.org/college_endowments.html
@BiffBrown How certain is it that Emory is hit with this tax? That list you posted says Emory is $430,000 per student. If Emory is hit with the tax it would be particularly straining as we don’t have an financial aid fund…yet.
Emory is $530K per student.
@ljberkow
Darn, that’s closer to the cutoff than I expected. Maybe Emory can increase enrollment at the grad schools to offset the endowment per student metric.