The current version of President Trump's tax bill could transform how universities like the University of Pennsylvania operate their endowments.

Why it matters: The bill would tax college investment income based on the size of a school's endowment per student (charted below), with the stated aim of holding "woke, elite universities" accountable.

• One of the driving forces behind the bill is the argument that if large universities behave like hedge funds with educational institutions attached, then they should start being taxed more like hedge funds and less like educational nonprofits.

How it works: The chosen metric is endowment per student, with richer colleges on that basis facing higher taxes.

• On its face, that incentivizes universities with bigger endowments to enroll more students — although there's also an incentive for smaller colleges to enroll fewer students, since institutions with fewer than 500 students are exempt.
• The denominator also now excludes foreign students, which is likely to push some schools up a tax bracket, per a TIFF analysis — UPenn being one example.
• Crucially, these aren't marginal tax rates, either.

By the numbers: Counting UPenn's full roster of 24,219 students, its $1.1 billion of investment income would face a tax bill of $77 million.

• Because only its 17,316 domestic students are counted, however, that bill doubles to $154 million — enough to pay full tuition for 2,500 individuals.

Between the lines: Recent high-profile philanthropic gifts have been designed to create a tuition-free experience for all students, in the longstanding tradition of colleges like Philly's Curtis Institute of Music. (Curtis hasn't charged tuition since 1928.)

• The Albert Einstein College of Medicine in the Bronx has now joined those ranks, thanks to a gift from Ruth Gottesman, joining two medical schools associated with NYU. The Craig Newmark Graduate School of Journalism at CUNY plans to become fully tuition-free in 2026.
• Because the endowment tax only applies to schools with more than 500 tuition-paying students, even schools that still charge some students should find themselves exempt.

What we're watching: Universities could adjust by shifting toward investments that don't produce taxable income, Anne Duggan of TIFF Investment Management writes.

• Alternative assets like private equity — as well as stocks like Berkshire Hathaway and many ETFs — don't pay dividends and could escape the new taxes.

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The rising cost of child care is outpacing overall inflation, per a new report.

Why it matters: Rising child care costs put a huge financial strain on families, forcing some parents — typically women — to either ratchet back their working hours or leave the labor force entirely, writes Axios' Emily Peck.

By the numbers: In Pennsylvania, the average annual cost of daycare tuition nationwide for two children — one toddler and one infant — was $27,400 last year, according to data from Child Care Aware, an advocacy group.

• That's about 34% of median household annual income in the U.S., based on Census data released in 2024.
• The cost of child care in the U.S. just keeps climbing — prices rose 29% from 2020 to 2024, per the report.

Zoom out: The U.S. doesn't have publicly funded universal childcare.

• However, the federal government does put money into the system for low-income kids through block grants to the states, as well as Head Start, the decades-old federal program that provides childcare, nutrition assistance and other services to the nation's poorest families
• There were worries that the White House would stop funding Head Start, but the administration has said that won't happen.

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Buckle up and start your engines at the motorsports bar F1 Arcade in Center City, which opens today.

The big picture: Philly is F1 Arcade's third location in the U.S., besides Boston and Washington, D.C.

Driving the news: The huge arcade and bar at 1300 Chestnut St. opens at 4pm.

• The 19,000-square-foot space boasts 80 dual-screen racing simulators, lounge seating, a private event space, upscale eats and themed drinks.

🛞 Mike here! I got behind the wheel at the arcade for a sneak peek before it opened.

• My take: It's a blast. My race was roughly 5 minutes, and the immersive simulation is head-and-shoulders above anything I've ever played.

🏎️ What else: F1 Arcade also hosts Grand Prix watch parties to watch races on its big TV screens, starting this Sunday ($49).

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🔑 "Abbott Elementary" creator Quinta Brunson received a key to the city yesterday during a mural unveiling ceremony at her alma mater, Andrew Hamilton Elementary. (Inquirer)

📈 More than 6,000 K-12 students enrolled in Philly district and charter schools — the majority of them Black and Latino — experienced homelessness during the 2023-24 school year, up from about 4,800 the previous year, per a new district report. (Billy Penn)

🏀 ICYMI: The man, the myth, The Answer. Post Malone brought 76ers great Allen Iverson on-stage while performing his hit song "White Iverson" at a concert at Citizens Bank Park this past weekend. (People)

Philly middle-schooler Fertuna Mengitsu won a citywide speech contest this week with her address on the importance of building community in schools.

Why it matters: Speeches can launch careers. Just ask Mayor Cherelle Parker, who credits a high school speech contest with helping build her impressive oratorical skills.

What they're saying: "The future of Philadelphia lies in the hands of us and the everyday decisions we make," Mengitsu, a seventh-grader at Martha Washington Academics Plus School, said in her remarks.

• "It is not money that makes a change. It is not elections that make a change. It is not I that makes a change. It is we."