Here’s what the endowment tax in Trump's 'big beautiful bill' may mean for your college tuition

President Donald Trump’s megabill includes an increased tax on the endowment income of the nation's top colleges

Higher education experts say the new, higher tax rates could lead to revenue shortfalls and cause some schools to raise tuition prices, cut financial aid or both

Watch now3:0803:08Top universities face endowment tax hikesSquawk on the StreetThe "one big beautiful" tax-and-spending package President Donald Trump signed on Friday included several significant changes for higher education — among them, an increased tax on the endowment income of the nation's top colleges

Higher education experts say the new, higher tax rates could lead to revenue shortfalls and cause some schools to raise tuition prices, cut financial aid or both

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It is for most, but not allWhat to know before you tap your 529 planThe exemption for schools with fewer than 3,000 tuition-paying students scaled back the plan from earlier versions of the GOP's marquee legislation. "It's not an endowment tax anymore, it's a re university tax," said Rick Grafmeyer, a partner at Capitol Tax Partners in Washington

Yana Paskova / Stringer (Getty Images)Yale University warned that the tax hike would have immediate consequences for the school's bottom line. "Although the endowment tax is lower than what the House passed originally, it still means that Yale will pay an estimated $280 million in the first year it is in effect, and ly more in subsequent years," Yale's President Maurie McInnis said in a statement on July 3

The university announced before the bill passed that it had already implemented a temporary hiring freeze, lowered annual salary increases for faculty and staff members and delayed several construction jects at the school in anticipation of the tax increase and other federal actions

Colleges to face 'unprecedented fiscal challenges'Higher endowment taxes, along with restrictions on international student enrollment and major cutbacks of federal and state funds, put many colleges in a precarious financial position, according to Robert Franek, editor in chief of The Princeton Review. "Colleges, both private and public, are facing unprecedented fiscal challenges this year and en masse," Franek said. "Most concerning, for spective students, is these factors may cause tuitions to be higher and reduce the amount of financial aid schools award," he added

At some colleges, the higher endowment tax exceeds the college's total financial aid budget, according to higher education expert Mark Kantrowitz, "making it difficult for colleges to continue to award very generous financial aid. "Typically, when it comes to offering aid, wealthier institutions have more money to spend

Those generous aid packages remove the most significant financial barrier to higher education and help attract lower-income applicants

Tuition hikes are ly to the higher endowment tax, other experts also say. "We're already seeing evidence that institutions are raising their sticker prices more than they have been in the past," Phillip Levine, a fellow at the Brookings Institution and fessor of economics at Wellesley College, told CNBC

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Going forward, "it doesn't seem 5% or 6% is out of line or beyond what schools are willing to do, and that's at [both] public and private institutions," Levine said. "And they're doing this because they're expecting revenue shortfalls. "— Senior field ducer Stephanie Dhue contributed to this report