Tax and Finance

The Issue

While the federal tax code is no substitute for federal student aid programs or financial aid provided by colleges and universities, it has played an increasingly significant role over the past two decades in helping low- and middle-income students and families finance higher education. There are multiple ways the tax code could be updated to better support students, most notably by repealing the taxability of Pell Grants and modernizing key higher education tax credits.

The tax code also contains a number of provisions that help support higher education institutions in their educational and research missions. Finally, there are tax provisions that apply to colleges and universities as tax-exempt entities. The American Council on Education focuses its advocacy on legislative and regulatory efforts concerning this array of tax provisions important to students, families, and institutions of higher education.

Our Work
Understanding College and University Endowments
October 23, 2024
Understanding College and University Endowments
Brief answers to questions frequently asked by students, faculty, alumni, journalists, public officials, and others regarding the purpose, history, and functionality of endowments. (Updated October 2024)
Summary of Understanding College and University Endowments
October 23, 2024
Summary of Understanding College and University Endowments
An overview of ACE's Understanding College and University Endowments paper, which answers commonly asked questions regarding the purpose, history, and functionality of endowments.
Comments to the House Ways and Means Committee on 2025 Tax Reform
October 15, 2024
Comments to the House Ways and Means Committee on 2025 Tax Reform
On behalf of 19 other higher education organizations, ACE wrote to the chairs of the House Ways and Means Committee with proposals to reform the tax code to benefit students and strengthen institutions.
ACE Policy Recommendations to 2024 Presidential Candidates
September 11, 2024
ACE Policy Recommendations to 2024 Presidential Candidates
Ahead of the November election, ACE wrote to the presidential candidates’ campaigns with recommendations for key policies to strengthen higher education.
Comments on the Proposed Rule on Green Energy Elective Tax Payments
August 7, 2023
Comments on the Proposed Rule on Green Energy Elective Tax Payments
Comments to the IRS and the Department of the Treasury on the proposed regulations concerning elective payments for green energy tax credits under the the Inflation Reduction Act of 2022.
Letter of Support for the Tax-Free Pell Grant Act
May 5, 2023
Letter of Support for the Tax-Free Pell Grant Act
Letter to Reps. Lloyd Doggett (D-TX) and Mike Kelly (R-PA) strongly endorsing the Tax-Free Pell Grant Act, which would repeal the taxability of Pell Grants and help hundreds of thousands of students access the American Opportunity Tax Credit.
Letter to Congress on the Expiration of Federal Subsidies for Build America Bonds
November 17, 2022
Letter to Congress on the Expiration of Federal Subsidies for Build America Bonds
Letter from ACE and six other higher education organizations to congressional leadership requesting a renewal of federal subsidies for the Build America Bonds program beyond their current January expiration date.
Comments on the Eligibility of Public Institutions for Green Energy Tax Credits
November 3, 2022
Comments on the Eligibility of Public Institutions for Green Energy Tax Credits
Comments to the IRS and the Department of the Treasury requesting guidance clarifying that all public universities are eligible for green energy tax credits under the the Inflation Reduction Act of 2022.
Letter to Congress in Support of the Tax-Free Pell Grant Act
October 28, 2022
Letter to Congress in Support of the Tax-Free Pell Grant Act
ACE, on behalf of 15 other higher education organizations, sent this letter to the leaders of the House Ways and Means Committee and the Senate Finance Committee urging them to include the Tax-Free Pell Grant Act in any lame-duck tax legislation.
Letter to Congress in Support of the Higher Education Provisions in the Build Back Better Act
October 20, 2021
Letter to Congress in Support of the Higher Education Provisions in the Build Back Better Act
Letter to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer urging Congress to retain the level of higher education funding and key tax provisions provided in the Build Back Better Act passed by the House Budget Committee.
Letter to House Leadership on Repealing Pell Grant Taxability
September 23, 2021
Letter to House Leadership on Repealing Pell Grant Taxability
Letter from ACE and other assocations to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy urging them to repeal the taxability of Pell Grants in the FY 2022 budget reconciliation process.
Letter to the Senate Finance Committee on Repealing Pell Grant Taxability
September 22, 2021
Letter to the Senate Finance Committee on Repealing Pell Grant Taxability
ACE President Ted Mitchell writes to urge members of the Senate Finance Committee to repeal the taxability of Pell Grants in the FY 2022 budget reconciliation process.
Letter to Chairs and Ranking Members of the Ways and Means and Finance Committee on Repeal of the Taxability of Pell Grant Aid in Reconciliation
September 3, 2021
Letter to Chairs and Ranking Members of the Ways and Means and Finance Committee on Repeal of the Taxability of Pell Grant Aid in Reconciliation
On behalf of ACE and the undersigned higher education associations are writing to urge you to repeal the taxability of Pell Grants by incorporating the “Tax-Free Pell Grant Act” in Reconciliation.
Letter to Chairs and Ranking Members of the Ways and Means and Finance Committee on Higher Ed Tax Proposals in American Jobs and American Families Plan
June 14, 2021
Letter to Chairs and Ranking Members of the Ways and Means and Finance Committee on Higher Ed Tax Proposals in American Jobs and American Families Plan
We are urging Congress to include the tax proposals onlined here in any legislation that incorporates the American Jobs and American Families plans.
Summary of the Higher Education Provisions in the Consolidated Appropriations Act of 2021
January 7, 2021
Summary of the Higher Education Provisions in the Consolidated Appropriations Act of 2021
High-level summary of the higher education provisions in the latest COVID-19 emergency relief bill, including the a breakdown of the $22.7 billion in emergency assistance for higher education institutions and students.
Letter to Congress on Tax Credits in Next COVID-19 Emergency Aid Bill
August 3, 2020
Letter to Congress on Tax Credits in Next COVID-19 Emergency Aid Bill
Letter to the leaders of the Senate Finance and House Ways and Means committees on making colleges and universities eligible for certain tax credits in the next COVID-19 spending bill.
Comments on the Proposed Main Street Lending Program Nonprofit Facility
June 22, 2020
Comments on the Proposed Main Street Lending Program Nonprofit Facility
ACE and 53 other higher education associations submitted comments to the Federal Reserve on a dedicated program for nonprofits to access affordable loans to help mitigate the economic fallout from the COVID-19 crisis.
Request to Exclude All Student Workers from the Paycheck Protection Program Threshold
June 8, 2020
Request to Exclude All Student Workers from the Paycheck Protection Program Threshold
Letter to the Small Business Administration requesting the exclusion of both Federal Work-Study and other students workers from the total number of campus employees for purposes of the Paycheck Protection Program loan eligibility.
Make Higher Education Institutions Eligible for FMLA Tax Credit
June 2, 2020
Make Higher Education Institutions Eligible for FMLA Tax Credit
Letter to Sens. Mitch McConnell and Chuck Schumer urging them to colleges and universities eligible for the paid sick and family leave refundable tax credit created in the Families First Coronavirus Response Act.
Expanding the Main Street Lending Program to Nonprofits
May 29, 2020
Expanding the Main Street Lending Program to Nonprofits
Letter to the Senate Committee on Banking, Housing, and Urban Affairs in support of the House HEROES Act provision requiring the Federal Reserve to expand the Main Street Lending Program to all nonprofits, including colleges and universities.
Expanding the Paycheck Protection Program to All Nonprofits
May 29, 2020
Expanding the Paycheck Protection Program to All Nonprofits
Letter to the Senate Committee on Small Business and Entrepreneurship urging support for the House HEROES Act provision that expands the Small Business Administration Paycheck Protection Program to all nonprofits, regardless of size.
Latest News
ACE Releases Updated Brief on Understanding College and University Endowments
October 23, 2024
ACE Releases Updated Brief on Understanding College and University Endowments
​ACE has released an updated version of Understanding College and University Endowments, a brief that examines how these funds support an institution's educational mission, enhance access, and bolster innovation.
ACE, Other Higher Ed Associations Urge Congress to Reform Tax Policies for Students and Institutions
October 16, 2024
ACE, Other Higher Ed Associations Urge Congress to Reform Tax Policies for Students and Institutions
ACE and a coalition of higher education associations submitted comments yesterday to the Republican Tax Teams of the House Ways and Means Committee, emphasizing the importance of tax reforms that benefit college students, families, and institutions.
ACE Calls for Policy Focus on Higher Education in Presidential Campaigns
September 16, 2024
ACE Calls for Policy Focus on Higher Education in Presidential Campaigns
​In an open letter addressed to both presidential candidates, ACE has outlined a comprehensive set of policy recommendations aimed at leveraging U.S. colleges and universities to address the nation’s most pressing challenges.
Navigating the EPA’s Community Change Grants Application Process
August 19, 2024
Navigating the EPA’s Community Change Grants Application Process
Watch the webinar ACE hosted on Aug. 12 to help equip campuses with the knowledge needed to navigate the application process for the Environmental Protection Agency’s Community Change Grants program.
House Ways and Means Committee Advances Controversial Bills
July 15, 2024
House Ways and Means Committee Advances Controversial Bills
The House Ways and Means Committee last week advanced two higher ed-related tax bills, both of which could have serious consequences for colleges and universities.
Watch Now: How Your Institution Can Save Money and Fight Climate Change
March 21, 2024
Watch Now: How Your Institution Can Save Money and Fight Climate Change
Colleges and universities can now tap into significant cost savings and boost sustainability efforts thanks to new clean energy tax credits included in the 2022 Inflation Reduction Act.
ACE, Other Associations Support Tax-Free Pell Grant Act
May 8, 2023
ACE, Other Associations Support Tax-Free Pell Grant Act
ACE and 19 other higher education associations are supporting the Tax-Free Pell Grant Act, which would repeal the taxability of Pell Grants and help hundreds of thousands of low-income Pell Grant recipients access the American Opportunity Tax Credit.
What’s Going on With Budget Reconciliation, and Why Should Higher Ed Care?
September 23, 2021
What’s Going on With Budget Reconciliation, and Why Should Higher Ed Care?
ACE Senior Vice President Terry Hartle and dotedu host Sarah Spreitzer unpack where Congress stands on reconciliation and what it means for students and institutions.
ACE, Other Associations Offer Comments, Principles on ED Rulemaking for Title IV Programs
July 6, 2021
ACE, Other Associations Offer Comments, Principles on ED Rulemaking for Title IV Programs
ACE and 43 other associations submitted comments July 1 on an array of topics that the Department of Education has indicated could be subject to negotiated rulemaking under Title IV of the Higher Education Act.
Understanding How College and University Endowments Work to Support Students, Institutions
March 15, 2021
Understanding How College and University Endowments Work to Support Students, Institutions
ACE has released an updated version of the paper "Understanding College and University Endowments,” which discusses how these funds support an institution's educational mission and answers frequently asked questions about how they work.
Public Policy Pop-Up: Higher Education and the Biden Administration
January 25, 2021
Public Policy Pop-Up: Higher Education and the Biden Administration
ACE’s Terry W. Hartle and Jon Fansmith discuss how the new Biden administration and Congress will impact higher education, taking audience questions throughout the webinar as part of a new interactive format.
IRS, Treasury Release Final Rules on Endowments
September 28, 2020
IRS, Treasury Release Final Rules on Endowments
The Internal Revenue Service and Treasury Department have released the final rules implementing the so-called endowment tax on colleges and universities approved as part of the 2017 tax reform bill.
ACE, Other Associations Call for Expansion of COVID-19 Emergency Loan Programs
June 1, 2020
ACE, Other Associations Call for Expansion of COVID-19 Emergency Loan Programs
As the creation of a new lending facility for nonprofits through the Main Street Lending Program is not a certainty at this point, ACE is calling for the expansion of existing loan programs to better serve colleges and universities.
House Approves 5th Emergency COVID-19 Spending Bill With $100 Billion for Education
May 18, 2020
House Approves 5th Emergency COVID-19 Spending Bill With $100 Billion for Education
House lawmakers approved a new emergency supplemental spending measure to address the economic devastation caused by the COVID-19 pandemic.
Emergency Student Aid Grants Will Not Be Taxed; House Bill Would Give Additional Relief to Students and Families
May 11, 2020
Emergency Student Aid Grants Will Not Be Taxed; House Bill Would Give Additional Relief to Students and Families
The IRS announced last week that CARES Act emergency student financial aid grants will not be taxable.
ACE, Higher Education Groups Ask Congress to Ensure Emergency Student Aid Is Not Taxed
April 21, 2020
ACE, Higher Education Groups Ask Congress to Ensure Emergency Student Aid Is Not Taxed
ACE and 41 other higher education groups are calling on Congress to ensure that emergency student financial aid grants authorized by the CARES Act are not taxed.
Coronavirus Stimulus Bill Allocates $14 Billion to Higher Education
March 30, 2020
Coronavirus Stimulus Bill Allocates $14 Billion to Higher Education
ACE President Ted Mitchell called the higher education provisions in the plan, which total approximately $14 billion, “woefully inadequate.”
ACE President Ted Mitchell on Senate Stimulus Bill’s Impact on Students and Institutions
March 25, 2020
ACE President Ted Mitchell on Senate Stimulus Bill’s Impact on Students and Institutions
While this legislation is an improvement from where the Senate started, the amount of money it provides to students and higher education institutions remains woefully inadequate.
Senate Likely to Vote on Stimulus Package Later Today; Support for Students and Institutions Still Being Negotiated
March 24, 2020
Senate Likely to Vote on Stimulus Package Later Today; Support for Students and Institutions Still Being Negotiated
Senate Minority Leader Chuck Schumer (D-NY) and Treasury Secretary Steve Mnuchin said last night that they were nearing a deal on a $2 trillion economic aid package to help Americans, U.S. businesses, and specific groups survive the coronavirus pandemic.
Congress Fixes “Kiddie Tax” Mistake, Approves Other Higher Education Tax Provisions
December 20, 2019
Congress Fixes “Kiddie Tax” Mistake, Approves Other Higher Education Tax Provisions
Congress this week approved several tax provisions of importance to higher education, including a fix to the so-called “kiddie tax” mistake made in the drafting of the 2017 Tax Cuts and Jobs Act (TCJA) that has inadvertently caused harm to many low- and m
Statement by ACE President Ted Mitchell on Fixing the "Kiddie Tax" Mistake
December 19, 2019
Statement by ACE President Ted Mitchell on Fixing the "Kiddie Tax" Mistake
Statement released on December 19 supporting the recent fix to the kiddie tax mistake.