The bill, drafted by Rep. Tom Reed, R-New York, would require universities with endowments larger than $1 billion, such as UNC-Chapel Hill, to use 25 percent of their annual returns on endowment investments to reduce tuition costs for students from families below the federal poverty level.
“Congress is trying to signal that they are concerned about higher costs and want universities to do more to lower these costs,” said Shirley Ort, associate provost and director of scholarships and student aid for UNC.
An endowment fund is created when a donor gives money to a university to be invested, and the money generated by the investment is spent on programs specified by the donor — such as scholarships, fellowships, library acquisitions, faculty research and undergraduate advising.
Eric Johnson, spokesperson for the UNC Office of Scholarships and Student Aid, said the bill targets schools with large endowments and less-generous financial aid policies than UNC.
“Schools are in very different circumstances when it comes to endowment wealth and how they choose to use it,” he said. “I think a single solution for all of them is unlikely to work well.”
UNC, for example, is already meeting full financial need, doing so overwhelmingly through the use of grants. During the 2015-16 academic year, UNC’s endowment fund provided more than $7 million in funding for scholarships, said Janet Kelly-Scholle, spokesperson for UNC Finance and Accounting.
Forty-three percent of students at UNC receive financial aid, and 74 percent of undergraduate aid comes in the form of grants and scholarships, Johnson said.
“There is a lot of angst nationwide — especially about the cost of private universities — and this is another area where we are obviously not the target of a proposal like this,” he said.