The high cost of a college-education is a hot topic in the news these days. What if the most expensive, and wealthiest, colleges were forced to earmark 25% of any donations to provide financial aid for middle-class students? The idea is now being floated in Congress.
Congress will soon be considering a plan that would require a quarter of the gifts to the wealthiest colleges be used for middle-class financial aid, or risk their charitable status – and the tax-deductibility of donations.
According to a recent article in Private Wealth, “Rich College Donors’ Tax Break Suddenly in Danger,” the idea is part of a tax proposal offered by U.S. Representative Tom Reed, a western New York Republican and vice chair of President-elect Donald Trump’s transition team.
The plan would apply to the roughly 100 colleges with endowments exceeding $1 billion. Reed wants to make sure that those institutions offer steep discounts to families with annual incomes of $24,000 to $145,000.
President-elect Trump has not endorsed this proposal, but if it passes, wealthy donors may want to revisit their estate planning and any planned gifts to these colleges to make sure that they are in compliance and gifts will be fully tax-deductible.