House Ways and Means Subcommittee Holds Hearing on Endowments

House Ways and Means Oversight Subcommittee Chair Peter Roskam (R-IL) held a hearing yesterday to learn more about how institutions of higher learning use their endowment funds and to discuss potential changes to regulations and laws governing the issue.

College and university endowments have come under increased scrutiny at a time when tuition costs are rising higher than inflation. Witnesses at the hearing suggested several possible solutions, including that the Form 990 should be adjusted to require more transparency from colleges and universities about endowment earnings and losses and management costs, and that lawmakers should consider implementing an excise tax scheme for schools with endowments above $500 million. Roskam also proposed exploring the idea of additional incentives for donors who contribute to scholarships instead of other areas, and keeping in mind indirect as well as direct benefits from endowment funds for student aid.

Meanwhile, subcommittee member Tom Reed (R-NY) continues to develop legislation on this topic, which he hopes to introduce later this year. Currently, Reed’s bill would require schools with endowments above $1 billion to put a percentage of endowment income toward grants for working-class families. The bill may also include new Form 990 disclosure requirements and address large compensation packages for employees who manage endowment funds.

Sources: House Ways and Means Committee, BNA Daily Tax Report (subscription required)

Types: Blog
Global Topics: Congress
Policy Issues: Tax & Fiscal Policy