With many of the largest U.S. college endowments at record values, two congressional committees that determine tax policy jointly opened an inquiry about how the wealthiest schools manage and spend those funds.
The Republican leadership of the Senate Finance Committee and the House Ways and Means Committee sent letters late Monday by e-mail to 56 private schools with assets of more than $1 billion, citing their “numerous tax preferences,” and adding weight to the federal scrutiny of college endowments.
Congress is evaluating the value of federal policies that permit tax-free investment earnings for schools and tax deductions for donors. One proposal recommends that schools spend more on tuition relief as the cost of college skyrockets. Some private colleges have sticker prices of more than $65,000 annually.
“Despite these large and growing endowments, many colleges and universities have raised tuition far in excess of inflation,” according to the letter, signed by Orrin Hatch, chairman of the Senate Finance Committee, Kevin Brady, chairman of the House Ways and Means Committee, and Peter Roskam, chairman of the House Ways and Means Oversight subcommittee.
Schools that received the letter ranged from Amherst College in Massachusetts to Yeshiva University in New York, and included the eight members of the Ivy League.
“We look forward to providing Congress with data and information they can use to become more familiar with the essential role that college and university endowments play in helping support higher education and in creating opportunities and access for so many students who otherwise might not be able to attend,” said Bill Burger, a spokesman for Middlebury College, which has a $1.1 billion endowment.
George Washington University is reviewing the letter and will comply with the request, said Candace Smith, a spokeswoman for the school, which has a $1.6 billion fund.
Several other schools, including Duke University, Cornell University and Lehigh University, declined to comment on the letter.
The query comes a month after Tom Reed, a Republican congressman from New York, proposed a draft bill that would mandate endowments of more than $1 billion devote 25 percent of their annual investment income to reduce college costs for low- and middle-income students or lose their tax-exempt status.
Schools supply limited information about their endowments on Internal Revenue Service forms, including the balance, earnings and a breakdown of investment categories. Some colleges voluntarily supply additional details on their websites or in annual reports.