The recent increase in the endowment tax for private wealthy universities in the U.S. is causing financial strain, leading some institutions to lay off staff, freeze hiring, and consider cuts in financial aid. The new tiered tax system, set to begin in 2026, could significantly impact top schools like Harvard, Yale, and Stanford, which are already facing budget challenges from reduced federal research funding and new tax obligations. Universities are adjusting by reducing budgets and implementing layoffs, all while trying to continue supporting financial aid for lower-income students.

Business President Donald Trump signed the tax increase into law last month as part of his signature spending bill. An woman walks past Rice University's Lovett Hall, the oldest building on campus, Jan. 23, 2001, in Houston.