Friday, November 17, 2017
Orphan Endowments Of Dead Schools Bedevil U.S. States
According to the U.S. Department of Education, 763 higher-education institutions closed in 2016. This is the highest recorded number of closures since 2012. While some remaining assets can be sold to satisfy creditors, orphaned endowment funds are uniquely controlled by a patchwork of state laws. These laws tend to frustrate vendors and bondholders still owed money by the school, as regulations prevent them from accessing the endowment assets for repayment. In most cases, the attorney general has to step in to navigate the legal morass in order to dispose of what can be relatively insignificant sums of money.
See Kate Smith, Orphan Endowments Of Dead Schools Bedevil U.S. States, Financial Advisor, March 9, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.