The fantastic wealth held by American university endowments has long been shielded from federal taxation on the assumption that non-profit educational institutions are a good deal for the public, educating future workers and creating new knowledge at relatively low cost. But as tuitions continue to rise with no end in sight—funding soaring administrative salaries, luxurious amenities, and costly athletic programs—even as many campus war chests seem to overflow with cash, lawmakers are re-visiting the endowments’ tax exempt status. The Washington Post reports:
One of the most polarizing issues in higher education took center stage on Capitol Hill on Tuesday as House members questioned whether universities could do more with their tax-exempt endowments to help families struggling with the high costs of college.
Wealthy universities, in particular, have drawn criticism from lawmakers for raising tuition far in excess of inflation while sitting on hefty endowments. Congressional Republicans have asked 56 private universities, each with endowments exceeding $1 billion, for information about the use of that money. Elite institutions have derided the attention on their endowments as misguided, arguing that they are not savings accounts that can easily be drawn down.