WASHINGTON — The question of whether Yale and its wealthy peers are spending enough of their endowment riches will be debated today as the Senate Finance Committee convenes here to hold a round table on the topic.
The discussion comes as the latest round in the sparring match between Iowa Republican Sen. Chuck Grassley, the committee’s ranking member, and America’s richest universities over whether today’s generation of students are paying the price, in terms of rising tuition, for what some call institutional stinginess on the part of their schools.
Yale officials will be paying close attention to today’s discussions. University President Richard Levin has said Grassley’s concerns in part drove Yale’s decision in January to increase its endowment spending by 37 percent this year and implement a minimum payout of 4.5 percent annually.
That change came as Grassley mused about introducing legislation to require at least the wealthiest universities — Yale certainly among them — to spend at least 5 percent of their endowments each year. Administrators at Yale have scoffed at the idea, saying it could hurt the University’s ability to safeguard its finances in the long term.
Grassley has said he recognizes that his idea has received criticism, but it is clear the senator has not given up on the thought of a mandatory payout.
“There are those in the university community who give the impression that skyrocketing tuition is a fact of life, endowments are their nest eggs to nurture and a higher endowment payout would cause the sky to fall,” he wrote in Forbes Magazine last month. “But maybe it’s time to crack a few of those eggs in the name of student aid.”
Indeed, Grassley will likely reaffirm that suggestion in his remarks this afternoon. The roundtable will explore, as a press release put it, “the impact of legislation requiring a mandatory payout from endowment funds.”
Yale Law School professor Henry Hansmann LAW ’74 GRD ’78 will be among the two dozen participants in three separate discussions scheduled for this afternoon in the Finance Committee’s hearing room. Also scheduled to participate are the presidents or chancellors of five universities, including Shirley Tilghman of Princeton and Anthony Marx ’81 of Amherst College.