Institutions with large endowments once again facing Congressional scrutiny

Institutions with large endowments once again facing Congressional scrutiny

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Members of the Senate Finance Committee and the House Ways and Means Committee wrote this week to 56 colleges and universities with endowments larger than $1 billion, asking about how they use the earnings. Inside Higher Ed reports these institutions seem to be at the crosshairs of a renewed push to regulate the way they use their endowment earnings…

Dive Brief:

  • Members of the Senate Finance Committee and the House Ways and Means Committee wrote this week to 56 colleges and universities with endowments larger than $1 billion, asking about how they use the earnings.
  • Inside Higher Ed reports these institutions seem to be at the crosshairs of a renewed push to regulate the way they use their endowment earnings, including from a bill that Rep. Tom Reed (R-NY) plans to introduce, requiring these colleges to spend 25% of their earnings subsidizing the costs of students from working families or lose tax-exempt status.
  • Republicans have led the charge against these wealthy universities for about nine years, as tuition has risen much faster than inflation and eaten up a large chunk of federal financial aid spending, but Democrats may not join them, as Washington Sen. Patty Murray, the Senate education committee's ranking Democrat, has said the party is more focused on an agenda that affects students beyond the most elite schools.

Dive Insight:

Critical attention on schools with the largest endowments helped pressure them to offer more generous financial aid packages to the lowest-income students over the last decade. It is often cheaper for a student from this socioeconomic level to attend a very wealthy university than a state school because of the opportunity for loan-free financial aid packages.

Reed’s proposal to force institutions to spend 25% of earnings on student aid for low-income students is an increase from the one he discussed last fall, which suggested only 10%. Some worry this focus won’t actually help with access at the most elite schools, and instead will end up benefitting middle class and wealthier families.

Recommended Reading

Inside Higher Ed: Billion-dollar targets


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