Explosive growth in the size of college endowments has prompted Congress to call for the nation's wealthiest universities to open their coffers and spend more on financial aid.
A study released Thursday by the National Association of Colleges and University Business Officers found a 17.2-percent one-year average investment return for the endowments of the 785 institutions surveyed.
The results, which covered the fiscal year spanning from July 2006 to June 2007, also found universities spend, on average, 4.6 percent of their endowments each year.
Duke's endowment grew third fastest among the 76 schools in North America with endowments exceeding $1 billion. The University's 31.4-percent growth rate, which accounts for donations, withdrawals and management fees in addition to investment return, trailed only the University of Notre Dame and the University of North Carolina at Chapel Hill, which weighed in at 34.7 percent and 32.1 percent, respectively.
The findings prompted Sens. Max Baucus, D-Mont. and Chuck Grassley, R-Iowa of the Senate Finance Committee to send letters to the 136 American colleges with endowments of $500 million or more, asking them to provide details about their endowments' investment, growth and spending on student aid.
"Tuition has gone up, college presidents' salaries have gone up and endowments continue to go up and up," Grassley said in a press release. "We need to start seeing tuition relief for families go up just as fast. It's fair to ask whether a college kid should have to wash dishes in the dining hall to pay his tuition when his college has a billion dollars in the bank."
The Senate Finance Committee has jurisdiction over tax policy, including tax exemptions covering college donations and endowment funds. Federal law requires most tax-exempt private organizations to pay out five percent of their assets annually toward their charitable cause, but no such requirement exists for university endowments.
John Burness, senior vice president for public affairs and government relations, said Duke had not yet received the letter but would be happy to answer the senators' questions. He added that the University committed last spring to spending five percent of the endowment each year and recently tapped endowment funds to pay for sweeping changes to financial aid introduced in December.
The study also noted that university asset managers have increasingly turned to foreign investment in pursuit of high returns, a trend inquired about in the Senate letter.
"This year's survey shows a steady movement out of U.S. fixed income and U.S. equity and into non-U.S. equity over the past five years," said Brett Hammond, chief investment strategist at the Teachers Insurance and Annuity Association-College Retirement Equities Fund, according to DowJones news service. "I think this suggests that endowments of all sizes are becoming increasingly comfortable with the idea of no longer being U.S.-centric with their investments, and we anticipate that this represents a long-term strategy."
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