In July 2025, President Trump signed the "Big Beautiful Bill" into law, raising the federal excise tax on Harvard's endowment investment income from 1.4% to 8%—a nearly six fold increase projected to cost the University over USD 200 million per year. The tax targets institutions with endowment assets exceeding USD 2 million per domestic, tuition paying student. Harvard's USD 53 billion endowment works out to roughly USD 2.9 million per student, placing it in the highest bracket alongside eight other private universities. The Senate Finance Committee had pushed for the increase amid broader Republican criticism that elite universities accumulate tax exempt wealth while raising tuition. The financial impact is concentrated. Nearly 80% of Harvard's endowment is restricted by donor agreements to specific purposes—professorships, scholarships, building maintenance—meaning the tax burden falls disproportionately on unrestricted funds. Those unrestricted funds currently support financial aid, faculty salaries, and research operations. Endowment distributions already account for 37% of Harvard's operating revenue. Harvard Management Company CEO N.P. Narvekar, who took over in 2016, restructured HMC from a hybrid model managing 65% of assets in house to one where 90% is now externally managed. The overhaul cut staff from over 200 to roughly 100 and increased private equity allocation from 16% to over 40% of the portfolio. HMC reports a 9.6% annualized return since 2017, exceeding its internal 8% target—but still trailing the S&P 500's 13–15% returns over the same period. Narvekar had warned alumni in September 2024 that a higher tax rate would force changes in investment strategy and capital allocation. The original 1.4% endowment tax, introduced in 2017, drew sharp criticism from then President Drew Faust, who called it "unprecedented." Harvard's federal relations team lobbied against it, but lawmakers framed the levy as a check on untaxed endowment gains at wealthy institutions. The 2025 increase escalates that logic considerably. The new law does not revoke Harvard's tax exempt status, though the IRS had moved to do so in April 2025 over disputes related to the University's handling of campus protests. Narvekar plans to retire in late 2027. He leaves HMC leaner and more conventionally structured, but with the endowment still underperforming peers—and now facing a tax rate that makes that gap materially more expensive.