University administrators supplied the Senate Finance Committee with detailed information about its financial-aid and endowment policies last Monday in response to a written request from the committee. The request is the latest in a series of steps the committee has undertaken to investigate the possibility of government regulation of University spending.
Requests for information were sent to 136 of the nation’s universities with the largest endowments on January 24, giving universities 30 days to prepare and provide responses. The committee provided schools with 11 detailed questions prompting respondents to explain the total cost of undergraduate tuition, detail any outreach efforts for recruiting low-income students, and disclose bonuses paid to chief financial officers.
These requests come after Senate hearings on the much-publicized record growth of college endowments in recent years. According to the National Association of College and University Business Officers (NACUBO), 76 colleges and universities with endowments of $1 billion or more have seen a 21-percent increase in endowment values. The U of C’s endowment, currently 13th in the nation at $6.2 billion, grew by 28 percent in the last fiscal year.
In light of these vast increases in funds in recent years, the committee has expressed apprehension at the low levels of spending from colleges and universities given rapidly increasing costs of higher education.
“Tuition has gone up, college presidents’ salaries have gone up, and endowments continue to go up. We need to start seeing tuition relief for families go up just as fast,” said Senator Chuck Grassley (R–IA), ranking Republican on the committee, in the press release announcing the committee’s actions.
According to the release, the committee, which helps set tax policies, is concerned that colleges are not required to pay out a set percentage of their assets like other non-profit organizations. Private foundations are mandated to spend five percent of their assets toward charitable purposes. The average payout among U.S. colleges and universities is 4.6 percent.
Many universities have countered that much of their endowment is tied up due to restrictions individual donors place on funds. While the majority of the U of C’s endowment is similarly restricted, the school has still spent more than five percent of its endowment for the past two years, according to the University’s response to the Senate’s request.
Among their concerns, senators were especially interested in universities’ allocation of funds toward student financial aid.
“Senator Grassley is concerned that some universities are amassing huge amounts of wealth and not using reasonably small amounts of that for aid,” said Jill Gerber, a spokesperson for Grassley.
According to Gerber, Grassley is seriously considering introducing legislation to rectify what he views as a missed opportunity for increasing college affordability. Gerber said that while the senator has not introduced anything yet, he might do this by mandating a five-percent payout for endowments, she said.
These concerns follow recent developments in college affordability, with Harvard, Yale, Stanford, Dartmouth, and the U of C introducing new financial-aid policies for the coming academic year.
The U of C report emphasized its neighborhood initiatives to “build and maintain pipeline programs” for disadvantaged students to attend college and its new Odyssey Scholarship program. The $400-million program will replace student loans with grant money for low-income students.
As of Friday, only 57 schools had responded to Grassley’s request. Of those that replied, some cautioned the committee on enforcing arbitrary regulations of endowment spending.
“Princeton has been able to make substantial investments [in the public good],” wrote Princeton president Shirley Tilghman in the university’s response, “only because of the generosity of its donors and its careful stewardship of its resources over many years.”
According to Robert Rosenberg, associate vice president of public affairs communications at the U of C and a co-author of the University’s response, the response to the committee’s requests was a useful endeavor.
“The questions help frame the role of the University in funding a capital-intensive, local, and specialized enterprise,” he said. “It’s an exercise in educating the committee on how universities function and allocate their spending.”
He did note, however, that nothing the University sent to Grassley was secret information.
“What’s interesting in this poking around is that most of the information is available in annual reports and on our website,” he said. “There’s nothing hidden that they’re going to be surprised about.”