An amendment offered by Sen. Pat Toomey (R-Pa.) would exempt all colleges that don’t accept federal student aid from the endowment tax. | AP Photo Democrats defeat GOP bid to shield conservative college from endowment tax

Four Senate Republicans joined with Democrats to strip from the GOP tax bill a last-minute provision that would have shielded Hillsdale College, a prominent conservative school, from a new tax on university endowments.

An amendment offered by Sen. Pat Toomey (R-Pa.) — and incorporated into a package of changes Republicans unveiled Friday evening to their tax plan, H.R. 1 (115) — would have exempted all colleges that don’t accept federal student aid from the endowment tax.


But Democrats immediately cried foul over the plan because it appeared to benefit only a single college, Hillsdale College, whose president, Larry Arnn, is influential in conservative intellectual circles.

Arnn, who was floated last year as a potential pick to be President Donald Trump’s Education secretary, has served as a Heritage Foundation trustee since 2002. The school also has close ties to the family of Education Secretary Betsy DeVos.

Republican Sens. Susan Collins of Maine, Deb Fischer of Nebraska, John Kennedy of Louisiana, and Lisa Murkowski of Alaska joined with Democrats early Saturday morning to pass an amendment by Sen. Jeff Merkley (D-Ore.) that stripped the provision from the tax bill.

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Democrats had blasted the move as a giveaway to a school with ties to powerful conservative donors.

“This is a very limited provision written for a very special person,” Sen. Claire McCaskill (D-Mo.) said on the Senate floor, noting the school’s connections to the DeVoses. Betsy DeVos' brother, Erik Prince, is a Hillsdale graduate, according to the college website.

According to the Hillsdale Collegian newspaper, DeVos' father-in-law, Richard DeVos, co-founded Amway with Jay Van Andel. Van Andel's son, Steve, is a Hillsdale graduate and Amway leader, and the Hillsdale graduate school of statesmanship was named in his honor after he made contributions to graduate school operations and scholarships, the newspaper said.

Sen. Ron Wyden (D-Ore.) questioned why the school was receiving a “special exemption” that was “airdropped at the last minute” into the bill. “I can’t find anybody else in America who benefits from this particular provision,” he said.

Of the colleges that report data to the federal government, only Hillsdale College would be affected by the provision, according to an analysis of Education Department data provided by a Democratic aide.

Toomey defended his provision, saying it was “perfectly reasonable” to exempt colleges that turn down federal money from the endowment tax because those schools impose less burden on federal taxpayers.

He also accused Democrats of mischaracterizing the exemption, saying it would apply to Hillsdale as well as other colleges that choose to forgo federal funding. Toomey declined to answer Democrats’ inquiries on the floor about which other schools would benefit.

The proposed tax on private university endowments is part of both the Senate and House tax bills. The House-passed version applies the tax to colleges with assets of at least $250,000 per student. Senate Republicans on Friday raised that threshold to $500,000 per student in their bill, further narrowing the number of colleges that would be hit by the tax.

Hillsdale, a private Christian liberal arts school in southern Michigan, enrolls about 1,400 students and has an endowment of about $528 million. The college proudly rejects federal funding and the regulations and requirements that come along with it.

The amendment that would have exempted colleges that reject federal funding from the endowment tax was co-sponsored by Sen. Ted Cruz (R-Texas) and supported by conservative Heritage Action.

Spokesmen for Toomey and Cruz did not immediately respond to a request for comment; neither did a representative from Hillsdale College.

College and university presidents have lobbied heavily over the past several weeks to stop the new tax on university endowments. They argue it will take away money that schools use to help students afford college and invest in their campuses.