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This time of year, parents of college bound seniors start figuring out how they're going to pay for school. It can be tough: Tuition and fees at most public and private schools have risen at double the pace of inflation in the past few years.
Recently, Congress started taking a closer look at tuition hikes, and asked colleges with large endowments to explain their policies.
WBUR's Monica Brady-Myerov reports.
TEXT OF STORY:
MONICA BRADY-MYEROV: Boston is home to some colleges with very large endowments. Mark Orlowski is the executive director of the nonprofit Sustainable Endowments Institute.
MARK ORLOWSKI: Universities and colleges in the United States combined have more than $400 billion with a "b" and in the metro Boston alone there's nearly $50 billion dollars.
MONICA BRADY-MYEROV: Harvard University tops the list with an almost $35 billion endowment. MIT has nearly $10 billion. Universities have rarely had to defend their endowments to the public. But in February the Senate Finance Committee asked schools with more than $500 million to answer detailed questions. Harvard, MIT, Tufts, Boston College, and Northeastern, among others, responded with a rare glimpse into financial aid policy, tuition increases and how their endowments are managed. The prevailing explanation is that these funds benefit more than the college. Here's Harvard's Kevin Casey, Associate Vice President for Government, Community and Public Affairs.
KEVIN CASEY: None of the research and education programs that we provide are fully supported by grants or tuition. We have to off set those costs by raising the money philanthropically. The idea behind that is that there's a public good being produced here in terms of research and education. Lots of which would have to be done by the government if it wasn't done by these institutions.
MONICA BRADY-MYEROV: MIT says 80% of its $10 billion is restricted for specific purposes. It says it's a critically important piece of how the school works to educate students and foster innovation. And yet, Kirk Kolenbrander, Vice President for Institute Affairs, says some people have the wrong impression.
KIRK KOLENBRANDER: 254 Endowments look like large bank accounts for institutions. And institutions ought to be able to go into them at will.
In fact they are truly complex instruments which need to be dealt with very carefully and thoughtfully.
MONICA BRADY-MYEROV: But the large bank accounts have drawn criticism. The former President of Boston University John Silber, says Harvard's makes it an 800 pound gorilla in the neighborhood and the government should revoke its tax exempt status.
JOHN SILBER: They have about 10% of all the endowment of all the universities in the United States and they suck about $400 million a year out of the philanthropic potential of the Northeast. There's a time for them to say enough is enough.
MONICA BRADY-MYEROV: Silber doesn't speak for Boston University. But several colleges say on background they resent getting dragged into Congress to explain their endowments, which pale in comparison to schools in the top ten. And they can't afford to increase financial aid significantly like Harvard and MIT recently did.
Senators on the Finance Committee are questioning whether universities should be required to spend 5% of their endowments each year, just like other non-profits. Currently Harvard spends 4.6%.
KEVIN CASEY: 1501 I think that would be a really big mistake.
MONICA BRADY-MYEROV: Again Kevin Casey of Harvard.
KEVIN CASEY: Because you're basically penalize institutions for having the kind of quality programs that encourage donors to pursue their philanthropic aspirations through the institution.
Casey says it also wouldn't be fair to smaller institutions who are trying to build their endowments.
MONICA BRADY-MYEROV: But as Congress looks at ways to reduce the college debt burden, many say they are shooting at the wrong target by going after endowments. It's a large endowment that allows students in the Harvard class of 2007 to graduate with a median debt of $6,700. While the average debt for a student graduating from the UMass public system is more than $14,000.
For WBUR I'm Monica Brady-Myerov.
This program aired on March 24, 2008. The audio for this program is not available.
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