U.S. Lawmakers Coming For College Endowments
Posted on 12/15/2023
Multiple U.S. lawmakers have their eyes on university endowments, immense pools of wealth that colleges are reluctant to spend down. Endowment money is used to help finance scholarships and other programs each year, but this is only a trickle of their net assets. Now U.S. Senators J.D. Vance and Rick Scott say the game is over for endowments. According to an X post by Vance: “The endowments at Penn, Harvard & MIT have a combined US $95B+ in assets – yet only pay a 1.4% tax rate on net investment income. Then they use these funds to push DEI and woke insanity. My bill would tax the largest endowments at 35% – it’s going to the Senate floor right now.”
Senator Rick Scott has also announced the Changing Our Learning, Loans, Endowments, and Graduation Expectations (COLLEGE) Act to “Force universities to take more responsibility when it comes to preparing students for successful careers and to hold university administrators accountable for unacceptable skyrocketing price of education.” Senator Scott’s legislation would make higher education institutions responsible for student debt, and require reporting for student success.
Senator Scott said, “For far too long, state and federal leaders have taken a misguided and failed approach to managing public institutions of higher education. The result of their decades of failed policy and mismanagement is millions of Americans with mountains of student debt racked up earning degrees that haven’t prepared them for good, high-paying job in the real world. Now, these same ‘leaders’ are claiming that the answer to our higher education problems is massive and unconditional student loan debt forgiveness. It’s choosing to treat a symptom when we can cure the disease. If we want real results that improve student performance, boost post-graduation job placement and keep tuition affordable, we need to do the hard work of actually holding colleges and universities responsible for the outcomes of their students and accountable to the American taxpayer. My COLLEGE Act takes big, important steps toward doing exactly that.”
Scott continued: “As Governor of Florida, I fought every day to improve higher education in the Sunshine State. Our hard work with the leaders of Florida’s colleges and universities allowed us to increase transparency of higher education expenses, keep higher education affordable by holding the line on tuition and improve both educational and post-graduation outcomes for our students.”
Scott has kept tuition from rising as quickly at Florida’s public colleges and universities, vetoing any attempts to increase costs, eliminating automatic tuition increases, and preventing any tuition hikes between 2012 and 2018. His office says: “Senator Scott also repeatedly challenged the state’s higher education institutions to reduce costs for students and improve post-graduation job placement rates. This work included his US$ 10,000 Degree Challenge and the “Ready, Set, Work” Challenge. When Senator Scott ended his term as Governor, every public college and university in Florida that offered baccalaureate degrees also offered at least one $10,000 degree.”
The COLLEGE Act requires any university with an endowment to report to the Secretary of Education the size and growth of its endowment, and provide a cost-match for federal financial student aid award to pay for tuition, educational costs (books, equipment, etc.) and living expenses charged to students based on the size of the endowment. The larger the value of the endowment, the higher the match the university must provide.
