President Schapiro provided the U.S. Senate Finance Committee with a report on the College’s tuition, financial aid and endowment policies in a letter mailed this Friday. Senators Max Baucus and Chuck Grassley, the heads of the Committee, requested the information as they consider potential policies regarding college endowment income and financial aid spending.
The request followed the release of a study from the National Association of College and University Business Officers (NACUBO), which identified double-digit growth in the endowments of hundreds of colleges across the country. The committee contacted 136 U.S. colleges and universities that hold endowments of $500 million or more.
Williams made the list as its endowment reached $1.89 billion by last July and its endowment investments yielded a 24 percent return in the 2006-7 fiscal year.
While endowments grow, the Committee noted, there is often little relief for families who have to pay the tuition bill. Thus the Committee requested information regarding tuition and the means of increasing it, financial aid policies, and endowment management, growth and payout.
“We’re giving well-funded colleges a chance to describe what they’re doing to help students,” Grassley said in a press release from the Committee. “More information will help Congress make informed decisions about a potential pay-out requirement and allow universities to show what they can accomplish on their own initiative.”
As Schapiro described in his report, the College has taken steps to make a Williams education more affordable in recent years. In the past 10 years, the College has increased the percentage of students on Williams-based aid from 40 to 47 percent. It has offered aid to more students from low- as well as middle-income families. In the fall, the College decided to replace loans with grants in its financial aid packages next school year. More changes will be on the table this week at a small meeting of trustees.
Schapiro also referred to the College’s efforts to recruit students from low-income neighborhoods with the Access Success program and from low-income families with the Questbridge program. It has hosted low-income prospective and admitted students over special weekends during the school year.
These efforts have costs associated with them, but the College has been willing to spend what it must, according to Schapiro. “We will on average continue to take as much from the endowment as we can without being financially reckless,” he said in an e-mail. “Whether it is in the form of more generous financial aid packages, enhanced student support programs, further reductions in class size, or other investments, we will spend our considerable wealth on whatever it takes to make Williams an even better educational institution.”
According to Schapiro, the College already spends a considerable portion of its endowment each year. In the past few years, “we have spent above our average of 6 percent,” Schapiro wrote in the report.
The Senate Finance Committee may seek to enforce such high spending rates with legislation. As it described its intentions for the present inquiry, the Committee referenced the federal laws that require most private foundations to use 5 percent of their assets for their charitable purpose, and noted that no similar requirement forces colleges to use their endowments.
While a strict requirement could encourage colleges to better provide for the financial needs of their students, it would have its drawbacks. Schapiro wrote to the committee, “We … believe that our students are better served without a mandated minimum annual spending rate.” Including an example, he said, “The late 1990s brought unprecedented investment returns. Rather than rush to spend those new funds, the College chose for two years … to spend below the guideline until a strategic planning process could identify the best educational use of those funds.”
The report emphasized that the College has groups and committees in place to evaluate the financial policies regarding tuition, financial aid and the endowment. Schapiro finally reminded the Committee, “We devote considerable administrative, faculty, and trustee effort to making these complicated financial decisions in ways that support our mission and that honor the enormous trust invested in us by those who provide those funds.”