By Susan Kinzie
Washington Post Staff Writer
Tuesday, January 8, 2008
After another year of strong returns on its $22.5 billion endowment, Yale University will spend more of that money to help students pay for school, bolster scientific research and make the university's resources more widely available.
Yale will spend $1.15 billion from the endowment in fiscal 2009, 37 percent more than in this fiscal year, President Richard C. Levin said yesterday. The return on Yale's endowment was 28 percent in fiscal 2007, and the school, like other well-endowed colleges, has been under pressure to make itself more affordable.
Levin said that later this month the school will announce dramatic changes in financial aid for Yale College students.
Last month, Harvard University revamped its aid to middle- and upper-middle-class families, building on changes that ensured that the education costs of the neediest students would be covered entirely. All families that qualify for financial aid will receive it in grants, rather than being required to take out loans.
In part, the announcements are self-protective, said Patricia McGuire, president of Trinity Washington University. "Schools with these massive endowments are under incredible pressure from Senator Grassley and the Senate Finance Committee," she said, referring to Sen. Charles E. Grassley (R-Iowa). "The perception that certain institutions are just building up these endowments with billions and billions while doing nothing to restrain price growth" has fueled debate over whether there should be controls.
"For the first time in years, we're hearing good news about tuition and affordability," said Grassley, who had challenged the wealthiest schools to do more. "Harvard has the largest endowment, and Yale has the second-largest. It's a big deal that the two wealthiest colleges are making tuition more affordable. They set an example for all other well-funded schools to do the same."
Because university endowments are tax-exempt, it's not only an issue of access to college but also one of tax fairness, Grassley said in a statement. He said he hopes Congress will continue to discuss whether to impose on the wealthiest colleges a mandatory payout like that required of most private foundations.
Access has become a buzzword for colleges as studies have shown that the cost of tuition has been rising faster than inflation for years.
Cost is by far the biggest concern for families, said James A. Boyle, president of College Parents of America, a national advocacy group. "It's welcome news that schools are jumping on the bandwagon to use more of their endowment payout for students. But . . . it's hard to know what it will really mean for students and their families."
In addition to expanding financial aid, Yale said it will work to digitize its collections so that they are publicly available and to increase the number of classes online. The school also plans to increase its investment in research, particularly in biomedical sciences.
Yale is considering enlarging the number of undergraduates, from 5,300 to about 6,000, with two new residential colleges.
Some college presidents have complained that the wealthiest schools' recent efforts will do little to change the overall cost of education. McGuire said she disagrees with that contention. "Anything that helps the consumer is a good thing," she said.
But, she added, because most schools have a tiny fraction of the wealth of Harvard and Yale, "the ripple effect, I think, is going to be in a very small pool."