Bubbled Up
The debate over requiring endowments to spend more has bubbled up in the past two years. Congress held two hearings and sent an inquiry to the richest 56 private schools. About two dozen schools have included protection of endowments’ tax-exempt status on their lobbying agendas.
Congressman Tom Reed, a Republican from Western New York and an early supporter of President Donald Trump, tried to steer the conversation to more endowment spending to reduce tuition costs for middle-income students. Under a draft plan earlier this year, Reed discussed using donor deductions to encourage spending from new gifts on those middle-income students.
David Camp, the former chairman of the House Ways and Means Committee, in 2014 proposed a 1 percent excise tax on the net investment income of universities with endowments that have at least $100,000 per student.
A discussion a decade ago in a Senate Finance Committee hearing helped spur action in spending. While legislation was never introduced, several of the wealthiest colleges changed their financial aid policies, awarding grants that don’t need to be repaid instead of loans.
This article was provided by Bloomberg News.