As part of a federal government effort to make higher education more affordable, the U.S. Senate Committee on Finance sent a letter to the 136 U.S. colleges with endowments of $500 million or more on Jan. 24, to gather information about their endowment distribution and their financial aid programs, according to the Committee's press release. This initiative was followed by the U.S. House of Representatives' bill to expand the Pell Grant, the federal aid program for students from the lowest social classes, on Feb. 08.
Committee Chairman Sen. Max Baucus, D-Mont., and Committee Ranking Member Sen. Chuck Grassley, R-Iowa, the two highest-ranking men in the Committee, wrote the letter to collect data that could provide a basis for future legislation to regulate the endowment spending of colleges and universities. Although the letter is not a subpoena and has no legal power, most universities are expected to prepare the requested information, Gill Gerber, Grassley's press secretary, said in an interview with The Dartmouth.
The College, which made major changes to its financial aid program on Jan. 22, received a letter from the Committee because it was listed twenty-first in the 2007 National Association of College and University Business Officers endowment study. The College will provide the requested data, according to Adam Keller, executive vice president for finance and administration.
A few of the other schools that received the letter have also recently expanded their financial aid programs, among them Harvard University, Yale University and the University of Pennsylvania. These expansions are what stimulated the Senate's initiative, Baucus said in the press release.
"I have been encouraged by the recent changes that several universities have made to ensure access to higher education for low and middle income students," he said. "We need to engage America's colleges and universities to come together to address the fact that college tuition for young Americans and their families is increasing at a faster rate than inflation."
The Committee's initiative, however, may not directly increase the universities' financial aid budgets, Robert J. Birgenau, chancellor of the University of California, Berkeley, told The New York Times.
"I believe that Senator Baucus's and Grassley's intentions may be admirable, but understanding university finances is an extremely complex matter," he said.
In the future the Senate may require universities to spend at least five percent of their endowment annually, similar to what is currently required of private foundations, Keller said. This legislation prevents private foundations from making financial decisions based on self-interest, but would have less of an effect if applied to universities, he said.
"There is no self-interest in a college governed by the Board of Trustees," he added.
The Committee, if it imposed a spending regulation, might also overlook the instability of the financial markets, Henry Bienen, president of Northwestern University, told the Times.
"[The universities] have operating budgets which they cannot easily adjust with the ups and downs of markets," he said. "They cannot easily turn off spigots."
Gerber stated that because American universities are tax-exempt, their endowment spending should be federally monitored despite the alleged problems the initiative may involve. No legislative decisions will be made without a thorough analysis of the data and a series of discussions.
According to Keller, the disposition of the endowment spending should be left entirely to the governance of the universities.
