(Host) Congressman Peter Welch is looking for ways to help drive down the escalating cost of getting a college education.
One of his ideas would have required colleges to spend more of their endowments. And it got a swift reaction.
VPR’s Ross Sneyd reports.
(Sneyd) Welch says his idea was based on some old-fashioned math.
Tuition goes up year after year – and so does the amount that students have to borrow to pay for school. The federal government tries to help by boosting student financial aid.
But at the same time, some of the nation’s largest universities have multi-billion-dollar endowments. And they’re growing. Harvard’s is at $35 billion.
So Welch asked: Why not pour some of that endowment money into reducing tuition – at a rate of about five percent a year.
(Welch) “If every time we spend an additional dollar on financial aid, it gets burned up in higher tuition costs, our students are going to continue to be struggling. So my effort here is to invite the leadership of our institutions of higher learning to work with us on the cost side of the equation because at the end of the day we have to make college affordable.”
(Sneyd) Colleges don’t like the idea and have lobbied heavily against it in Washington. They say they’re private institutions and don’t want the government meddling with their endowments.
(Fogel) “We need to build that endowment value. We can’t spend it down.”
(Sneyd) University of Vermont President Daniel Fogel says the goal is to have that money for the long-term – and that requiring universities to spend a certain amount every year doesn’t make financial sense.
And he says they often can’t, because a lot of the money comes with strings. If it’s designated for libraries, for example, that’s where it has to be spent.
Congressman Welch says private foundations doing charitable work are required to spend at least five percent of their endowments each year.
But in the end, he relented, and withdrew his amendment. The point, he says, was made.
(Welch) “Our goal – and we were successful – was to send a message. Because, in fact, if we’re going to be successful in containing costs, we actually have to rely on the aggressive leadership of the presidents of our institutions.”
(Sneyd) The message certainly was received at UVM, which had an endowment valued at $350 million before the recent downturn on Wall Street.
Fogel says he shares Welch’s goal of making an education more affordable.
(Fogel) “I don’t think endowment spending was the way to get at it, at least as Congressman Welch proposed it this time. But I’m sure that he and we will find other ways to attack this college cost problem.”
(Sneyd) Still, Welch didn’t completely back down. He’s sticking with an amendment that would require colleges and universities to report to Congress every year how much of their endowment they spent – and on what.
For VPR News, I’m Ross Sneyd.
(Outro) The College Opportunity and Affordability Act did pass the House yesterday with a vote of 354 to 58. And the final version of the bill included Congressman Welch’s amendment requiring higher education institutions to report their endowment spending annually.
Welch said in a statement this report will give congress information about the efforts of colleges and universities to keep costs down for students.
AP Photo/Toby Talbot