"Wealthy U.S. colleges must spend more of their endowment gains on aid for middle-class families or lose their prized tax-exempt status, a Republican U.S. House member and a vice chair of President-elect Donald Trump’s transition team will propose Monday.
"In a September rally in Pennsylvania, Trump echoed Reed’s language: “I’m going to work with Congress on reforms to make sure that if universities want access to all these special federal tax breaks and tax dollars, paid for by you, that they are going to make good faith efforts to reduce the cost of college and student debt, and to spend their endowments on their students rather than other things that don’t matter.”
But what percentage of college students attend richly endowed schools, as opposed to public schools being defunded or tuition dependent private schools?
Suppose colleges used 5% of their endowments (less than their typical returns) to subsidize tuition. By my rough arithmetic on the two well-to-do schools that came to mind, Smith College could discount their tuition for every student by 75% while Harvard could offer free tuition to every student it enrolls.
Hampshire college, by contrast, could discount tuition by ~3% by using the annual returns of its endowment.
Unless private universities including Harvard decide to go the direction of colleges like Bob Jones, Liberty, etc in refusing any financial aid or Federal subsidies…including research grants, I can’t see them doing that.
Especially considering H and its peers accept plenty of Federal funds beyond Financial aid grants in the form of research and educational grants among other things.
Harvard offers free tuition to a lot of students. I’m not sure why they should be required to substantially discount tuition to families making, say, 250K +
I’d also be interested to see what they really mean by “spending their endowment…on other things which don’t really matter”.
Could this include cutting edge research or educational programs they may feel “don’t matter” because they are opposed on ideological grounds and/or because they don’t/don’t care to take the time to understand the possible long-term benefits which could be derived from such research/educational programs?
They could increase the annual percent taken from the endowment. And some did, after 2008. But believe it, the rich, savvy colleges will fight this. And rarely are they blind-sided by moves to interfere.
If you think about it, for all that’s currently being proposed, all the hot air, it would take years to get things passed. It’s up to us, however, to stay informed, not let some of the self-serving ideas go unchecked.