U.S. Senate Investigates College Endowment Practices

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college endowmentsMany top tier colleges and universities in the U.S. are sitting on a pile of cash, endowments built up over years of fund-raising, corporate giving, and investing. Now, the U.S. Senate Finance Committee is seeking information from 136 schools to learn how they handle their endowments. The Senate committee has jurisdiction over tax law which includes endowment funds.

The U.S. Senate Asks For Information

Two senators, committee chairman Max Baucus (D-MT) and Charles Grassley (R-IA), have requested that each school provide data on student aid, the cost of attendance, tuition increases and endowment spending over the past ten years.

Billions In Endowment Money

Over the past year, endowment funding in the U.S. and Canada increased by 21% to $411 billion while asset spending held steady at 4.6%. Some lawmakers are urging schools to raise spending to 5.0% in a bid to offset rising tuition, board and related expenses.

Federal law requires that most private foundations spend 5 percent of assets a year, but no such requirement applies to school endowments. The U.S. Senate has the power to force American schools to comply, but Sen. Baucus is urging the schools to take action instead of having Congress tell them what they must do.

Harvard, Yale Are the Endowment Leaders

Harvard has the world’s largest college endowment fund with nearly $35 billion in assets followed by Yale with $22 billion. SayCampusLife reported in December 2007 that both universities are part of a growing number of schools which are doing away with student loans by offering assistance directly to families.

Wikipedia has a list of U.S. colleges and universities by endowment worth noting.

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