NAICU Washington Update

Senate Finance Committee Questions Colleges with Big Endowments

The chairman and ranking member of the Senate Finance Committee have sent a detailed letter to 136 institutions with endowments over $500 million. The January 24 letter asks about endowment spending, tuition increases, and more.

Senators Max Baucus (D-Mont.) and Charles Grassley (R-Iowa) sent the letter following the release of the National Association of College and University Business Officers (NACUBO) annual report on endowments. The report showed a significant investment gain in endowments over the past fiscal year – earning 17.2 percent on average.

The senators' inquiry reflects the ongoing interest in college and university endowments by the Senate Finance Committee over the past several months (see WIR, 10/3/07). The letter also outlines the senators' concerns over rising tuition costs. As Grassley put it, "We're giving well-funded colleges a chance to describe what they're doing to help students. This information will help us make informed decisions about a potential [endowment] payout requirement..."

Many of the questions are straightforward, but others show a lack of understanding by policymakers of how college endowments function. The responses by colleges and universities do provide an opportunity to better educate Congress and staff on the many benefits endowments provide, as well as share impressive financial aid practices. NAICU has encouraged members receiving the letter to reply in a positive way, and to include in their responses additional information about the positive effects of their endowment in enhancing accessibility.

The letter asked targeted institutions to respond in 30 days. It's unclear whether the committee will continue to pursue endowment payout legislation. Much will depend on what they hear from responding institutions – and if they continue to feel pressure to address college costs via the tax committees.

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