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A Republican U.S. Senator is hoping universities will find new incentive to dig millions of families – and GW is being used an example.
Sen. Chuck Grassley, the ranking minority member of the Senate Finance Committee, has requested endowment data from 136 colleges including GW, as he prepares for possible legislation to mandate increased financial aid spending at private institutions. Representatives from Grassley’s office said they are particularly concerned about into their large tax-free endowments and help make college more affordable for where endowment money is allocated each year for schools with a bankroll of more than $1 billion.
In a news release, Grassley said his actions are spurred by rapidly growing tuitions at private universities.
“The rates of increase are eye-popping,” he said. “Consider paying $15 for a gallon of milk or shelling out $9.15 per gallon of gas. That’s what those items would cost today if their prices climbed at the pace of college tuition since 1980.”
Each February, the Board of Trustees approves a new tuition plan that is devised primarily by the administration. This year’s meeting will take place on Friday, and University President Steven Knapp and other administrators indicated this fall that it may be a defining moment of change in terms of GW’s financial future.
GW’s endowment, valued at $1.147 billion, produced $46 million this year to aid University operating costs. Out of that $46 million, $2 million or about 4.3 percent went toward financial aid.
Grassley’s is said to be considering a bill that would impose a 5 percent minimum annual payout towards financial aid. Under the Internal Revenue Code, University endowments receive significant tax breaks.
“We want to better understand how these tax benefits for higher education endowments are improving education and making undergraduate studies more affordable for low and middle income families today,” Grassley said.
Dean Zerbe, a Grassley spokesperson, said the senator wants to avoid legislation that will be overly taxing on higher education institutions.
“We’re happy to work with the universities in terms of making sure that it’s not unduly burdensome but (also we want to) ask a lot of questions,” he said.
On a panel convened last Friday to discuss this issue, Lynne Munson, a research fellow at the Center for College Affordability and Productivity, said she thinks universities are hoarding more money now than they ever have.
“The good news is that endowment funds are now on the table for discussion,” she said.
Members of Grassley’s office praised Harvard and Yale universities for recently taking major steps to change the landscape of financial aid. These members said they hope this will help other schools take a new look at their spending.
“When they see Harvard and Yale finally doing things then it makes people rethink what they are doing,” Zerbe said.
GW’s Executive Vice President and Treasurer Lou Katz said he was aware of the request from Grassley’s office for information, and added that the school will supply what they need.
“Obviously we can’t comment on what (Grassley’s) expecting or not expecting,” Katz said. “At this juncture, they are gathering data to determine which route they should be taking. And I think that is a responsible thing to do.”
