"Most people agree that college costs are too high, universities are probably not spending enough on financial aid and students are ... incurring too much debt, which is affecting their futures when they come out of school," said Steven Roy Goodman, a Washington-based education consultant. "This is the beginning of a much broader, a much farther-reaching question as to what the role of universities [is] in our society and how we should be financing these universities."
The Senate Finance Committee, which has jurisdiction over federal tax policy, has discussed legislation that would force colleges and universities to spend at least 5 percent of their assets each year, as most private foundations are required. Grassley and committee Chairman Max Baucus, a Montana Democrat, asked 136 schools last week for detailed financial information before they decide to proceed on what Grassley called "a potential pay-out requirement."
"University endowments receive very generous tax breaks under the Internal Revenue Code," Baucus and Grassley wrote in a letter to the schools, all of which have endowments of at least $500 million. "We want to better understand how these tax benefits for higher education endowments are improving education and making undergraduate studies more affordable for low- and middle-income families today."
