To respond to increasing tuition rates that surpass the inflation rate, federal lawmakers are requiring 56 universities, including Boston College, to release more information on the use of their endowments.
A letter was sent out to private universities who have amassed wealth greater than $1 billion since the end of 2014. The letter requires that colleges and universities answer a series of questions on the use of their endowment funds. The lawmakers’ intent is to guarantee that these schools are using the money to sponsor their “charitable and educational” purposes.
“We have received the questionnaire and will comply with the request in a timely manner.”
-University Spokesman Jack Dunn said.
Questions included “How does your college or university determine what percentage of the endowment will be paid out this year?” and “What percentage of financial aid does your school devote to financial aid for student tuition?”
“Despite these large and growing endowments, many colleges and universities have raised tuition far in excess of inflation,” Orrin Hatch, chairman of the Senate Finance Committee, said in the letter to the 56 universities.
In 2014, Boston College’s endowment reached $2.131 billion. In 2015, it rose to $2.220 billion, with a 4.1 percent change in market value.
“We have received the questionnaire and will comply with the request in a timely manner,” University Spokesman Jack Dunn said in an email. “Boston College has always been and remains a good steward of its resources.”
Under the Internal Revenue Code, most colleges and universities are tax-exempt entities because of their educational goals. According to the Internal Revenue Code 501(c)(3), these schools meet the educational purposes “that the Federal government has long recognized as fundamental to fostering the productive and civic capacities of citizens.”
The survey also aims to determine how to manage the tax breaks that donors receive after giving to these universities.
Nine other Massachusetts schools were on the list to be surveyed, including Harvard University, Massachusetts Institute of Technology, and Williams College. All eight Ivy League schools are also being reviewed.
The 13-question survey asks about endowment management, endowment use and spending, how the school handles donations, and conflict of interest policies. The survey must be completed and returned by April 1.
The lawmakers compiled the list of universities based on data published annually by the National Association of College and University Business Officers. Their report also mentioned that in 2014, endowments had an average return on investment of 15.5 percent and an average payout rate of 4.4 percent.
Last month, Tom Reed, a Republican congressman from New York, proposed a bill that required schools with endowments over $1 billion to give 25 percent of their investment income to aid financially needy students. Under the draft bill, if the universities did not comply, they would no longer be considered a tax-exempt entity.
“Specifically, we are working to hold colleges accountable and ensure that they are using their endowments to offer direct student aid to students from working and middle class families to help them afford college,” Reed said on his website.
Featured Image by Amelie Trieu / Heights Editor