Congress is dating a bill requiring certain
Colleges and universities have a legal requirement to spend restricted parts of endowments -- and their earnings -- in specific ways, said Ronald Ehrenberg, the director of Cornell University’s Higher Education Research Institute.Cornell lies within Reed’s upstate New York district.He’s describing it as a bridge, a step to take along with other measures.He’s already talking about possible additions to the proposal, including the idea of requiring universities to draw up spending plans geared toward keeping tuition increases in line with inflation.
Representative Tom Reed says he’s open to modifying a controversial proposal to channel spending from large college and university endowments into student aid, even as he pitches the idea to presidential candidates and takes flak from the higher education community.
Asked whether entire universities could lose tax-exempt status under the bill or whether only their endowments would be affected, a spokeswoman provided a statement saying the details are not fixed. That was just a small portion of the 828 endowments ranked.
“Questions like these are contingencies that we are taking under advisement as we move forward in this process, but once again, I would emphasize we are still ironing out the details of the bill,” it said. It’s an even smaller portion of the thousands of higher education institutions across the United States, said Steven Bloom, director of government relations for the American Council on Education, which represents 1,700 member institutions.
For the first year of noncompliance, a 30 percent tax would be levied on the undistributed earnings required to go to students.
The tax escalates to 100 percent for a second year of noncompliance, and institutions could lose their tax-exempt status if they were out of compliance for three years.
He added that any affordability efforts focused on endowments are bound to miss a large swath of students.