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October 13, 2008, 01:47 PM ET
Senator Challenges Colleges to Spend Their Endowments
Sen. Charles Grassley, Republican of Iowa, wrote an opinion article in the Los Angeles Times to urge colleges and universities to justify their federal tax exemptions by spending more from their endowments and providing more tuition assistance to the needy.
He writes that colleges do not pay federal income taxes on their operating income or investment returns from their endowments and that federal tax subsidies for colleges and their students add up to $17-billion per year.
Senator Grassley hopes that colleges will monitor themselves. He writes, “I told the experts I gathered in Washington last month that I’m looking for self-correction. I want to see voluntary action on college affordability before I legislate a mandatory endowment payout. Some of them took that to mean they’re off the hook. They’re not. Legislation is a possibility, either from me or someone else. If universities want to stave that off, they need to offer more ways they can make education more affordable and fewer reasons why they can’t.”
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