The Senate Finance Committee has requested detailed information from the nation's wealthiest colleges and universities on tuition increases over the last decade, their financial aid practices, and how they manage and spend their endowments, the New York Times reports. The committee also asked about endowment-related bonuses paid to college presidents and endowment managers.
Initiated by Senators Charles E. Grassley (R-IA) and Max Baucus (D-MT), the request for information comes as a record seventy-six colleges and universities registered endowments of $1 billion or more in the past fiscal year. Harvard University's endowment — the largest — grew 20 percent to $34.6 billion, while Yale University's — the second largest — grew 25 percent to $22.5 billion.
The committee has been pressuring universities to use more of their wealth for financial aid and is threatening to require them to spend a minimum of 5 percent of their endowments annually — in line with the mandated payout rate for foundations. The committee also noted that donations to universities and their endowment earnings are both tax-exempt. "Tuition has gone up, college presidents' salaries have gone up, and endowments continue to go up and up," said Grassley, the ranking Republican on the committee. "We need to start seeing tuition relief for families go up just as fast."
Seeking to head off congressional action, wealthy universities have been rushing in recent months to expand financial aid, in some cases using more of their endowments to increase assistance to low- and upper-income students alike. After Harvard recently said it would increase aid for families earning up to $180,000 a year, Yale followed suit with a plan to increase aid for families with annual incomes of as much as $200,000.
University officials expressed surprise at the broad information request as well as concern about Congress mandating how they use their endowments, which could be adversely affected by an economic downturn. "Universities are not like foundations," said Henry S. Bienen, president of Northwestern University. "They have operating budgets which they cannot easily adjust with the ups and downs of markets. They cannot easily turn off spigots."