Although Congress has yet to approve any new rules on the topic, the debate on Capitol Hill about wealthy colleges and their endowments is prompting elite institutions to adopt friendlier policies toward lower-income students, a Washington, D.C., audience was told Friday.
“This is what’s changing the tone among colleges,” said Dean Zerbe, senior counsel to the Senate Finance Committee, at a forum sponsored by the American Enterprise Institute in Washington, D.C., last Friday. “It’s a tremendous positive.”
Finance Committee members such as Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont., have raised questions about the $411 billion in endowments at U.S. colleges. Unlike nonprofit foundations, colleges are not required to spend 5 percent of their endowments per year, and many colleges’ funds are a well-kept secret. In mid-January, the Finance Committee asked 136 colleges with the largest endowments to provide more information about how they set tuition and award financial aid.
Meanwhile, some reformers inside and outside government have suggested that colleges spend more of their funds on at-risk students or lose some of their tax-exempt status.
Recent decisions by Harvard, Yale and other elite institutions to provide more need-based aid to students are signs that Congress’ focus on endowments is having an effect, Zerbe said.
Speakers at the forum on “University Endowments: Their Role in Higher Education and Possibilities for Reform” offered a litany of statistics about higher education’s surging endowments, particularly among Ivy League institutions and other elite schools. According to the College Board, for example, the wealthiest 10 percent of private universities could use their endowments to provide $454,000 to every full-time student.
Yet universities, overall, spend less than 4 percent of their endowments to support their mission annually. “They’re hoarding a lot more,” said Lynne Munson, an adjunct research fellow at the Center for College Affordability and Productivity.
