Why It Matters

Congress has enacted a new tiered endowment tax that directly threatens Washington and Lee’s financial model. The law imposes an 8 percent tax on endowments exceeding $2 million per student and a 4 percent tax on those between $750,000 and $2 million per student. Washington and Lee’s endowment sits at roughly $900,000 per student, placing it in the 4 percent tax bracket.

The impact is severe across higher education—Yale faces $280 million in new annual costs and has implemented hiring freezes and financial aid reductions. By retaining Holland & Knight LLP, particularly lobbyist Christopher J. Armstrong with his Senate Finance Committee and House Ways and Means Committee background, the university is positioning itself to influence regulatory implementation and advocate for future legislative modifications.

By the Numbers

Washington and Lee University invested $240,000 total in federal lobbying this year with Holland & Knight LLP. The fourth quarter filing represents a $60,000 quarterly commitment focused exclusively on the federal endowment tax.

The lobbying team includes Christopher J. Armstrong, the standout addition who served as Chief Counsel for the Senate Finance Committee and Counsel for the House Ways and Means Committee—the two panels drafting tax legislation. Armstrong is simultaneously lobbying the endowment tax for University of Southern California, University of Pittsburgh, and Claremont McKenna College.

The Agenda

Washington and Lee is lobbying exclusively on the excise tax provisions in H.R. 1, the "One Big Beautiful Bill Act," enacted in July 2025. The legislation replaced the prior 1.4 percent flat tax with a tiered structure: 1.4 percent for endowments of $500,000-$749,999 per student, 4 percent for $750,000-$1,999,999 per student, and 8 percent for $2 million or more per student.

With approximately $2 billion in endowments and $900,000 per student, Washington and Lee faces the 4 percent rate. The university joins Duke University, Wake Forest University, and Stanford University in retaining lobbyists, alongside associations like the American Council on Education and NACUBO.

Broader Context

President Trump signed H.R. 1 into law on July 4, 2025, creating immediate financial pressure on elite universities. Yale will pay an estimated $280 million annually, while Harvard and Yale each face roughly $300 million in additional costs.

The fiscal impact is driving institutional responses. Yale announced a 5 percent reduction in non-salary expenses and a hiring pause, while Princeton mandated 5-10 percent budget cuts. Academic operations are affected, with Princeton’s economics department shrinking its PhD program.

Between The Lines

Several bills shaped the final legislation. Rep. Troy Nehls introduced H.R. 446 proposing a 21 percent rate, while H.R. 1006 offered a tiered approach with 20 percent rates for institutions increasing tuition faster than inflation.

Republican leaders championed the measure. Rep. Jason Smith (R-MO), Ways and Means Chairman, stated the bill "increases the university endowment tax and subjects the largest endowments to the corporate tax rate." Rep. Nehls expressed "grave concerns" that the Senate was considering an 8 percent rate rather than his proposed 21 percent.

Competitive Landscape

Washington and Lee operates within a crowded field of institutions mobilizing against the endowment tax. Armstrong’s experience representing multiple universities on identical issues gives him deep sector knowledge. The coordinated response includes both individual university lobbying and sector-wide association efforts through ACE and NACUBO.

The Bottom Line

Washington and Lee’s $60,000 quarterly lobbying investment represents a strategic response to legislation already enacted. With the law targeting elite institutions for hundreds of millions annually, the university’s focus shifts to regulatory implementation and potential future modifications. The engagement through Armstrong’s expertise mirrors sector-wide efforts to minimize the new tax’s impact.

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