Senator Proposes Penalties for Colleges That Hoard Endowment Funds
In a recent letter to the U.S. House of Representatives Committee on Ways and
Means, Rep. Peter Welch, D-Vermont, proposed restricting IRA rollover contributions
to colleges that don’t use their endowments to help low and middle-income students pay for college, according to an
article in The Chronicle of Higher Education (“Proposal Would Restrict Certain Gifts to Colleges That Hoard Endowments,” May 13, 2008).
Welch said wealthy colleges, which are among the biggest beneficiaries of those IRA distributions, should be
ineligible to receive the perks if schools’ endowments aren’t used to contain college costs for needy students.
He urged the House Ways and Means Committee — which is currently drafting a new tax bill — to include penalties for
schools that hoard their endowment assets.
Another proposal by Welch, that would require colleges to spend at least 5 percent of their endowments every year
and to annually report how much of their endowment funds have been spent, is part of current House
legislation to reauthorize the Higher Education Act.
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