Sen. Ron Wyden, D-Oregon, the ranking member on the Senate Finance Committee, has introduced legislation to limit tax breaks for donations to colleges that are made to influence admission decisions.
The College Admissions Fairness Act would require colleges and universities to establish a policy that bars consideration of a family’s donation or its ability to donate as a factor in the admissions process in order for those donations to be fully tax-deductible.
If the university failed to implement such a policy, deductions would be limited to $100,000 of donations over a six-year period prior to or during the child’s university attendance.
The bill would also amend the Higher Education Act to require that any institution receiving federal financial aid implement the required policy and report the number of applicants, admitted students and enrolled students who are the children of donors. The Department of Education would make that data publicly available, and institutions would include the information on their annual IRS filings.
“It’s absurd that the tax code subsidizes the top 1% buying their way into school,” Wyden said in a statement. “Colleges and universities would be able to preserve the tax deductibility of all donations if they simply bar their consideration in admissions decisions. It’s ‘one and done’—implement a policy and you’re in compliance.”
Wealthy families have historically had an advantage in the college admissions process, especially for nonprofit private institutions due to family donations, legacy applications and other factors, but the subject didn’t attract broad attention until the recent college admissions scandal in the U.S.
More than 30 parents were charged with paying a consultant to bribe coaches or other college officials or to facilitate cheating on admissions tests in order to get their children admitted to a number of prestigious universities including Stanford, Georgetown, UCLA and USC. Those payments were illegal, unlike family donations to colleges.