Friday, January 25, 2008
We previously blogged on the possible "real" reasons for Harvard's and Yale's recent proposals to increase financial aid to students from middle class households by mentioning an editorial claiming that wealthy schools are trying to avoid legislation that would require a 5% annual pay-out from endowments. On January 25, 2008, the New York Times announces that the Senate Finance Committee is asking for information from "the nation's wealthiest colleges and universities" about tuition increases, financial aid and endowments. Here is an excerpt from the article:
The committee, which has a central role in setting tax policy, has been pressuring universities to use more of their wealth for financial aid and threatening to require them to spend a minimum of 5 percent of their endowments each year, as foundations must. The committee pointed out that donations to universities and their endowment earnings were both tax-exempt.
Seeking to head off Congressional action, wealthy universities have been rushing in recent months to expand financial aid, in some cases using more of their endowments to increase assistance to low-income and upper-income students alike. Harvard recently said it would increase aid for families earning up to $180,000 a year, and Yale said it would help families with annual incomes of as much as $200,000.
For the entire article, go to "Senate Looking at Endowments as Tuition Rises" in the January 25, 2008, New York Times.