Endowment limits proposed
October 9, 2007
The U.S. Senate has recently begun discussion on a bill that would mandate universities spending a set minimum percent of their endowment each year.
p. Supporters claim that this would lower the unnecessarily high tuition costs, especially in the case of private universities with large endowments.
p. Experts in higher education urged the Senate Financing Committee to back the initiative to set the minimal spending rate at 5 percent.
p. Supporters believe that universities take advantage of tax exemptions while charging unnecessarily high tuition rates, and think that this bill will curb tuition rates significantly.
p. Many elite universities favor the independence of college boards and are opposed to Congressional control over their individual endowments.
p. The political power of those who oppose the bill may prevent it from becoming law.
p. “[This would affect] schools with very large endowments and low payout rates,” Economics Professor Robert Archibald said.
“These are the politically powerful private schools, so it is unlikely to happen.”
p. The bill would most likely not have a broad effect on higher education.
p. Though elite private schools may attract the attention of the press, their students account for only a small percentage of the college population, Archibald said.
p. This bill, should it pass, would not drastically alter the College’s finances.
p. “The Endowment Association has just decided to up the payout from the endowment to 4.75 percent, so we are close to the 5 percent,” Archibald said. “The effect of the law would be minimal.”
This bill is still in its beginning stages in both the House and Senate.