Recession Response
Media Reports

Chronicle of Higher Education
January 28, 2009
Senator Urges Colleges to Avoid Tuition Increases

Sen. Charles E. Grassley, the senior Republican on the Senate Finance Committee, says he hopes a new report showing a big drop in the value of college endowments due to the crash in the stock market and other investments does not lead higher-education institutions to put the squeeze on students.

“I hope colleges won’t use the recent volatility as an excuse to raise tuition or freeze student aid,” said Mr. Grassley in a statement.

“They might forget the very recent years of double-digit gains or that many of them still have a lot of money in the bank,” the senator continued. “They might overlook that there always seems to be money for a salary increase for the president or a football coach.”

Earlier this week, the National Association of College and University Business Officers released a report showing that endowments at institutions surveyed by Nacubo lost 22.5 percent of their value from July through November.

Senator Grassley has been leading an effort to determine whether colleges and universities should be required to spend a minimum percentage of their endowments to reduce costs for students.

“Contrary to what colleges might argue, the weak economy makes a strong case for more endowment spending on student aid,” Mr. Grassley said. “If an endowment is a rainy day fund, it’s pouring. Colleges’ smart saving and investing could really help students right now. And the right kind of modest pay-out requirement for endowments above a certain dollar amount might do a lot of good for universities and students regardless of economic conditions.”

— Grant Williams
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Full text of Grassley's statement:

Grassley: College Endowment Volatility is Not Excuse for Skirting Student Affordability

M E M O R A N D U M

To: Reporters and Editors

Re: College endowment survey

Sen. Chuck Grassley, ranking member of the Committee on Finance, with jurisdiction over tax policy, made the following comment on the annual survey on college endowments from the National Association of College and University Business Officers (NACUBO). Grassley is interested in whether universities maximize their tax-exempt status to help students, in keeping with their charitable mission.

“I hope colleges won’t use the recent volatility as an excuse to raise tuition or freeze student aid. They might forget the very recent years of double-digit gains or that many of them still have a lot of money in the bank. They might overlook that there always seems to be money for a salary increase for the president or football coach. Contrary to what colleges might argue, the weak economy makes a strong case for more endowment spending on student aid. If an endowment is a rainy day fund, it’s pouring. Colleges’ smart saving and investing could really help students right now. And the right kind of modest pay-out requirement for endowments above a certain dollar amount might do a lot of good for universities and students regardless of economic conditions.”