What researchers studied

Event-study analysis of private universities affected by the 2017 Tax Cuts and Jobs Act's excise tax on nonprofit executive compensation above $1 million. 262 private colleges and universities and 457 presidents observed from 2012 through 2019

What they found

  • Total presidential compensation decreased by 13%, driven by declines in non-taxable and other compensation.
  • The probability that an institution replaced its president increased by 19 percentage points in 2018 and 12 percentage points in 2019 relative to 2017.
  • Net income increased by 30% and investment returns by 23% following the incentive change.
  • Among the most heavily taxed presidents, student net financial aid decreased by 0.56% for each additional 1% of tax burden.

What the study does not prove

  • The study was quasi-experimental rather than randomized and depends on event-study assumptions.
  • It focused on private universities and should not be generalized automatically to public institutions.
  • Institutional financial measures do not reveal the experience or aid decision of one student.
  • Other contemporaneous changes may have influenced compensation, leadership exits, investment returns, or aid.

Evidence strength: Quasi-experimental event-study evidence exploiting a federal policy change; institution-level averages and design assumptions limit individual and universal conclusions.

Why this matters for families

A university's name is only one signal. Compare the real net cost, academic support, and evidence of investment in students.

Noor interpretation

How Noor translates the evidence into practice

Families evaluating colleges should look beyond prestige and examine what an institution's incentives, budgets, and support systems actually protect.

Noor Lyra can help families connect academic fit with a realistic college plan that considers aid, student support, program demands, and the learner's preparation.

Read the original source

Noor links to the original or authoritative source so families can distinguish the evidence itself from our interpretation.

Open original source →

DOI: 10.26300/b16a-5504

Research notes

higher educationuniversity leadershipfinancial aidcollege planningincentives

Revision note: 2026-10-06: Corrected the institution to the author's University of Michigan affiliation, replaced the inaccurate “pay cap” wording with “compensation tax,” specified the 262-institution/457-president sample, and corrected the presidential-exit result from 19% to 19 percentage points in 2018 (12 points in 2019) relative to 2017.

No single study determines a student's plan. Noor uses research as one input alongside the learner's goals, observed performance, academic context, and response to instruction.