Many colleges and universities work to amass a $1 billion endowment, but some members of Congress worry this trend might not be the best way for schools to utilize their funds and increase affordability for students.
Last Thursday, the House of Representatives overwhelmingly passed a bill that aims to reshape the college financial system to make it more consumer-friendly and easy to navigate for families applying to schools. The bill would mandate a federal listing of the most expensive colleges in the country, and require loan companies to be more open about how they solicit customers. GW, perennially among the priciest schools in the nation, would undoubtedly feel effects of these measures.
The bill will also encourage colleges to rein in price increases and provide consumers with helpful information, restore integrity and accountability to the student loan programs, simplify the federal student aid application process and make text-book costs more manageable.
It also aims to ensure that low-income, minority and disabled students have equal access to higher education.
Supporters of the bill said they are questioning the propriety of well-endowed universities continuing to accumulate billion-dollar fortunes instead of returning the majority of the income from these funds to their students.
In just 12 months – from June 2006 to June 2007 – Harvard’s endowment increased by $5.7 billion dollars – about $475 million dollars a month. Harvard’s endowment is worth 34.9 billion in total.
Other prestigious schools such as Yale and Stanford universities are close behind with $22.5 billion and $17.1 billion endowments, respectively.
If signed into law, the bill will create a bill of rights for college consumers as a means to help ensure both federal and private loan programs work in the best interests of students.
Congress plans to make the federal Department of Education responsible for gathering and maintaining a list of the nation’s most expensive colleges.
“For too long, the rules of the education loan programs have been tilted in favor of the banks and lenders,” said Rep. George Miller (D-Calif.), who is the chair of the Committee on Education and Labor. “It is time that the rules favored students and families who are already struggling to pay for college amidst rising tuition prices.”
Lloyd Thacker, director of the Education Conservancy, a non-profit organization often critical of college admissions practices, said student loan companies should not have access to their target demographic.
He said colleges are violating their non-profit status rules with endowment accumulation, but it may not be the federal government’s job to tell colleges how to spend their resources either.
“Colleges have an obligation to behave more like educational institutions held in the public trust, and some should be embarrassed,” Thacker said.
Thacker said he believes that this bill may make wealthy universities more aware and encourage them to earn their tax-exempt status.
“I’m an idealist,” Thacker said. “I believe in education and want to believe that colleges can govern themselves like businesses of a special kind. Are some of these educational institutions not upholding to this idea? You bet they’re not.”
At GW, measures are already being taken. University President Steven Knapp announced his goals Friday to make GW more affordable. He said he plans to do this through increased fundraising for financial aid and offering more institutional grants versus loans. GW remains the nation’s most expensive University, with more than $50,000 in required costs.