At a roundtable discussion convened by Sen. Charles Grassley (R-IA) and Rep. Peter Welch (D-VT) on Monday, two dozen college presidents and policy experts defended the rising cost of tuition and argued against forcing colleges to spend more of their endowments, the New York Times reports.
In January, the Senate Finance Committee, of which Grassley is the ranking minority member, requested endowment and spending data from 136 colleges and universities with endowments of at least $500 million. During the meeting, Grassley said it was only fair to ask whether universities were doing enough for society, given that the value of their tax exemption in 2007 was more than $17 billion. Grassley cited a survey which found that last year universities earned an average return of 17.2 percent on their assets but spent only 4.6 percent of that income. Between them, the two richest universities, Harvard and Yale, control some $60 billion in endowment funds.
Education leaders at the meeting explained that many universities had taken steps to make college more affordable and that rising tuition costs were driven by the need to keep up with a profusion of new knowledge and rapid technological change. According to American Council on Education president Molly Corbett Broad, despite all the attention focused on the richest universities and highest tuitions, only 3 percent of the nation's college students attend institutions costing $25,000 a year or more, while just seventy-five universities control 71 percent of all endowment assets.
Although Grassley has repeatedly suggested he would like to see the richest universities spend at least 5 percent of their endowments each year, nothing was said at the meeting to suggest that specific legislation was on the horizon. Indeed, Grassley's closing remarks gave some comfort to university leaders, who worry that such legislation would interfere with their ability to manage in tough economic times.
Referring to his committee's focus on problems in the nonprofit sector a few years ago, Grassley admitted that he had expected it would take "a massive amount of legislation" to correct the problems. But, he told the educators, "a lot of the things that needed to be corrected were self-corrected...We'd like to encourage you folks to look inward and correct what can be corrected."